Fed survey: Banks report tightening standards and weakening demand for most loan types. Growing demand for HELOCs

To calculated risk 2022/11/07 05:06:00 PM

From the Federal Reserve: October 2022 Senior Lending Officer Survey on Bank Lending Practices

The October 2022 Senior Loan Officers’ Opinion Survey on Bank Lending Practices (SLOOS) looked at changes in the standards and terms and demand for bank lending to businesses and households over the past three months. This typically corresponds to the third quarter of 2022.

In terms of lending to businesses, survey respondents overall said: Tighter standards and weaker demand for commercial and industrial use (C&I) Lending to businesses of all sizes in the third quarter.Meanwhile, the bank reported Tightening standards and weakening demand for all commercial real estate (CRE) loans category.

For household loans, demand for all loans weakened as lending standards tightened or remained essentially unchanged across all categories of residential real estate (RRE) loans. In addition, Banks reported stricter standards and increased demand for home equity lines of credit (HELOCs)The standards for credit card loans and other consumer loans have tightened, but the standards for auto loans have remained the same. Meanwhile, demand for credit card loans strengthened, other consumer loans remained flat and auto loans weakened.
emphasis added

Click on the graph for a larger image.

This graph of residential real estate demand shows: Senior Loan Officer Survey Chart.

This indicates a sharp drop in demand.

The graph on the left is from 1990 to 2014. The graph on the right is from 2015 to Q3 2022.

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