Newsroom
Banks continue to ease loan standards and terms in Q4, according to latest Fed survey
The Federal Reserve’s January senior loan officer opinion survey (SLOOS) found that over the fourth quarter, banks reported having eased standards and terms regarding C&I loans to firms of all sizes. A significant net share of banks eased standards for multifamily loans secured by multifamily properties, while moderate net shares of banks eased standards for construction, land development, and nonfarm nonresidential loans.
“Banks are easing underwriting standards across a broad range of loan products, and they expect further easing in 2022,” stated NAFCU Chief Economist and Vice President of Research Curt Long. “This is despite the fact that banks do not see applicant quality improving noticeably. Credit unions should expect increased loan competition this year, both from banks and non-banks, which will continue to place pressure on net interest margins.”
In addition, here are a few key findings from the fourth-quarter survey:
- banks reported easier lending standards for most RRE loan types and revolving home equity lines of credit (HELOCs);
- banks eased standards for credit card, auto, and other consumer loans; and
- banks reported stronger demand for credit card loans over the fourth quarter, while a modest net share of banks reported weaker demand for auto loans.
The January survey also included a set of special questions inquiring about banks' expectations for changes in lending standards, borrower demand, and asset quality over 2022, assuming that economic activity would evolve in line with consensus forecasts. On balance, banks reported expecting lending standards to ease further and loan demand to strengthen. Meanwhile, banks reported mixed expectations about loan quality.
This senior loan officer survey was based on responses from 69 domestic banks and 21 U.S. branches and agencies of foreign banks.
Access the full survey from the Fed. See NAFCU's recent economic analysis reports here.