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The Federal Reserve’s October senior loan officer opinion survey (SLOOS) found that over the third quarter, banks generally reported having eased standards and terms regarding C&I loans to firms of all sizes. Modest net shares of banks reported stronger demand from large and middle-market firms, while small firms remained unchanged. 

“Banks eased lending standards over the third quarter across nearly every loan category. Demand is improving but has not recovered pre-COVID levels,” stated NAFCU Chief Economist and Vice President of Research Curt Long. “The exception is residential real estate, where low rates have spurred an enormous rise in demand, particularly for jumbo loans. NAFCU expects loan demand to continue to improve incrementally with rates of employment.”

In addition, here are a few key findings from the third-quarter survey:

• banks reported having eased standards on multifamily loans, while modest net share of banks reported easing standards on nonfarm nonresidential loans and construction land and development loans;
• banks eased lending standards for most mortgage loan categories as well as for revolving home equity lines of credit (HELOCs), this was most widely reported for jumbo loans;
• also, banks reported weaker demand for most residential real estate loan categories during this quarter, with QM jumbo mortgages and HELOCs being the only two exceptions; and
• credit card, auto, and other consumer loans also saw eased standards with credit card loans reportedly seeing stronger demand, while a moderate net share of banks reported weaker demand for auto loans.

The latest edition of the survey also asked respondents to describe the current level of demand relative to pre-pandemic levels for C&I and credit cards loans to which the overall responses indicated that the demand for C&I and credit card loans is weaker relative to pre-pandemic levels, however, banks do expect stronger demand over the next six months.

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.