Bank Lending Practices in October 2014

The October Senior Loan Officer Opinion Survey on Bank Lending Practices was released on November 3rd. This survey addresses changes in the standards and terms on, and demand for, bank loans to businesses and households on a quarterly basis and is based on the responses from 76 domestic banks and 22 U.S. branches and agencies of foreign banks. The Federal Reserve generally times the quarterly survey so that results are available for the January/February, April/May, August, and October/November meetings of the Federal Open Market Committee. The following is an abridged version of the Federal Reserve report followed by SMU comments and graphs.

Regarding loans to businesses, the October survey results indicated that only a modest net fraction of banks eased their standards for commercial and industrial (C&I) loans to firms of all sizes, but generally larger net fractions of banks eased each of the pricing terms listed in the survey and some non-price terms. Banks also reported having eased standards for construction and land development loans, a category of commercial real estate (CRE) loans included in the survey. On the demand side, modest net fractions of banks reported stronger demand for C&I loans to larger firms; similar net fractions experienced stronger demand for all three categories of CRE loans covered in the survey. Regarding loans to households, some large banks reported having eased standards on closed-end mortgage loans, but respondents generally indicated little change in standards and terms for other types of loans to households. Reported changes in loan demand were mixed. Moderate net fractions of banks reported stronger demand for auto loans and weaker demand for nontraditional closed-end mortgage loans. Demand for other types of loans to households was about unchanged at most banks.