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Fed Survey: CRE Loan Standards Tighten; C&I Holds Steady

Posted on 11/8/2016

Bankers continued tightening credit for commercial real estate loans in the last three months while holding steady on other business loans and consumer loans and easing credit standards slightly in their home mortgage portfolios, according to the Federal Reserve's latest senior loan officer survey released yesterday.

For large, midsize and small firms, on net bankers reported that they had left standards on commercial and industrial unchanged. Terms were also generally unchanged, although a net 18 percent reported raising caps on credit lines for larger firms. Demand for C&I loans was largely unchanged.

A less-favorable economic outlook was fingered as the main reason for those who tightened, with fewer citing industry-specific problems such as oil and gas prices than in the previous quarter. For those who eased loan terms, 80 percent said more aggressive competition was at least a somewhat important factor.

Significantly higher net percentages said they had tightened standards on a range of commercial real estate loans, with 42 percent saying they tightened on CRE multifamily loans and 27.5 percent tightening on construction or land development loans. Demand for CRE loans was moderately stronger or about the same, respondents said.

Meanwhile, 11.1 percent reported easing standards on GSE-eligible mortgages. About a quarter of respondents saw stronger demand for GSE-eligible mortgages, and large net percentages reported the same for Qualified Mortgage non-jumbo, non-GSE eligible loans and jumbo loans regardless of QM status. Standards were generally unchanged for credit cards, and a few lenders on net reported tightening on auto loans.

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