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Monday, May 4, 2015

C&I Lending Standards Little Changed, Residential Demand Increases

Over the past three months, banks have further eased lending standards for a variety of home loan types, while C&I lending remained little-changed, according the April Federal Reserve Senior Loan Officer Opinion Survey.

On net, 5.3 % of respondents reported easing standards for commercial and industrial lending to large and middle-market firms. For small businesses lending, the number of respondents reporting tightening standards were virtually equal to the number reporting easing standards. Most respondents that reported having eased standards cited more-aggressive competition from other banks and non-banks as a reason for doing so. A smaller segment attributed easing standards to a more favorable or less uncertain economy. Respondents who tightened standards pointed to industry specific problems and concerns about the effects of legislative changes or supervisory actions.

A modest net fraction of banks eased standards on loans eligible for purchase by government-sponsored enterprises, and on qualified mortgage jumbo mortgage loans. Modest to moderate net-fractions of banks reported increases in demand for most categories of home loans over the last three months.

The survey contained a special set of questions regarding lending to the oil and gas extraction sector. Although higher delinquencies are expected for this sector, banks indicated that their exposures were small, and have taken steps such as restructuring loans and reducing existing credit lines to reduce them further. Over 80% of banks surveyed stated that lending to this sector accounted for less than 10% of their C&I loans.

Read the Federal Reserve report

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