The Federal Reserve released a report on loan activity among U.S. banks in the third quarter.
The Fed’s Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) gauged demand for bank loans to businesses and households over the past three months. It also polled banks on loan standards and terms.
On loans to businesses, survey respondents reported generally tighter lending standards for commercial and industrial (C&I) loans to firms of all sizes. Further, banks reported, on balance, stronger demand for C&I loans from large and middle-market firms and basically unchanged demand from small firms. In addition, banks reported generally unchanged standards and demand for most commercial real estate (CRE) loan categories.
For loans to households, banks reported basically unchanged lending standards and stronger demand for residential mortgage loans and home equity lines of credit (HELOCs).
For consumer loans, standards remained basically unchanged for credit card and other consumer loans, but they eased for auto loans. Further, demand remained basically unchanged for credit card and other consumer loans and weakened for auto loans.
The report also included a set of special questions inquiring about the likelihood of approving C&I and credit card loan applications in comparison with the beginning of the year. Banks said they are more likely to approve C&I loan applications from both large and small firms with low trade exposures and less likely to approve C&I loan applications from firms of all sizes with high trade exposures.
Additionally, banks reported being more likely to approve credit card applications from super-prime and prime borrowers but less likely to approve applications from near-prime or subprime borrowers.
In another set of special questions, banks reported changes in customers’ investment needs to acquire inventory or make advance purchases. This is mostly due to changes in customers’ investment needs due to trade-related shifts in product availability and pricing. For credit card loans, banks cited increased spending needs for advanced purchases due to trade developments as an important reason for strengthening demand.