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Monday, November 3, 2014

Bank Lending Standard Continued to Ease

Over the past three months, banks loosened lending standards while loan demand rose slightly over the prior three months, according to the October Federal Reserve’s Senior Loan Officer Survey. Moreover, the pricing terms generally eased for loans.

Overall, 10.5% of the responding banks reported easing standards for commercial and industrial (C&I) lending to large and medium sized borrowers, and a net 8.2% loosened standards for small business loans. A net 15.8% of banks reported stronger loan demand for medium-to-large borrowers and a net 5.5% reported stronger demand from small borrowers.

The survey found that C&I lending generally increased to larger firms and CRE lending generally increased to firms of all sizes. The report also found that CRE lending standards have eased generally. The easing standards for C&I was due to increased competition from other banks.

Credit card, auto and nontraditional closed-end mortgage loans to households saw unchanged loan standards since the last report. There was mixed demand for prime residential mortgages. The survey found that a net fraction of large banks reported easing standards on prime residential mortgages while smaller banks reported that standards for prime residential mortgages were on net unchanged.

Read the release.

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