Fed: Fewer Banks Eased Commercial Lending in Third Quarter

Fewer U.S. banks eased standards on commercial and industrial loans during the third quarter, compared to more widespread easing in previous quarters, the Federal Reserve reported today in its latest survey of lending officers.
“This moderate net reduction in easing was concentrated in loans to large and middle-market firms, rather than in loans to smaller firms,” the Fed reported.
Far worse is the state of commercial real estate (CRE) lending, with U.S. banks continuing to report little change in standards on CRE loans, the Fed said.
In the previous survey, CRE lending was “at or near their tightest levels since 2005,” according to the Fed.
In the area of residential real estate lending, findings were somewhat encouraging. The survey said reports of stronger demand for mortgage loans to purchase homes outnumbered reports of weaker demand for the first time since early 2010, possibly driven by refinancing activity. Banks reporting weaker demand for home equity lines of credit increased in the third quarter, particularly among smaller banks.
Consumer Lending
Only “modest fractions” of banks reported the easing of standards on consumer credit card loans and on other non-auto loans. As in the previous survey, somewhat larger fractions of banks reported having eased standards on auto loans.
Overall, banks continued to report narrowing spreads between interest rates on auto loans and their cost of funds, though these reports have been volatile over the past few quarters.
A modest fraction of banks also reported lengthening maximum maturities and lowering minimum required credit scores on auto loans.
Few banks reported having eased some terms on credit card loans. A small number of banks reported a strengthening of demand for consumer credit card and auto loans, consistent with findings in the past few quarters. On average, banks reported small or mixed changes in the demand for other types of consumer loans.