WASHINGTON — Senior loan officers saw some slight increase in demand for real estate loans as terms eased, as well as slightly better rates and terms for auto loans, but the latest quarterly report on lending mostly showed the long trend of stagnant bank lending has continued, the Federal Reserve reported Monday.
Viewed on a chart, the upward trend for real estate loan demand was part of a modest rebound that began this year after three aftershock declines that followed the chasm that was the financial crisis.
"Domestic and foreign institutions," the Fed said, "reported having eased standards and experienced increased demand for commercial real estate loans."
While real estate loan demand has been inching toward new highs, commercial and industrial loan demand has been diving back toward the zero mark. Having shown some temporary resurgence last year, C&I loan demand appeared to bounce to a smaller peak sometime in mid-2013, heading down since at a steep rate of decline.
For households, the survey of 73 U.S. banks and some foreign subsidiaries through Oct. 15 showed no substantial change in standards or terms.
For auto loans, "a modest net fraction of banks reported having eased" with an increase in the maximum term of the loan with somewhat lower rates.
The report's methodology merely counts the banks whose loan officers indicate a direction for their approach to lending standards and is not a measure of volume or specific lending rates.
For its measure of lending standards, the report showed 62 or 86.1% of banking firms with annual sales of $50 million or more changed nothing. Only eight banks or 11.1% of the survey sample said they had "eased somewhat" their lending terms. None reported easing considerably and there were two banks that tightened.
While most of the report showed hardly discernible alterations in lending policy the construction and land development loan picture was the exception. A third of the 71 banks responding to that category reported "moderately stronger" demand. Four banks were on the other side, seeing "moderately weaker" or "substantially weaker" demand.
In another slice of real estate lending, that for loans secured by nonfarm nonresidential property, nearly 29% of the responding bank officers could report "moderately stronger" demand.
It was pretty much the same for loans secured by multifamily residential properties.
There was less change but still a positive direction in the responses about whether loan standards have eased for prime residential mortgages. There, of 69 banks answering the question, 10 or 14.5% said they had "eased somewhat." Not one "eased considerably."
For what were described as "nontraditional" mortgages, there was virtually no change.
The National Association of Realtors makes a point when reporting existing home sales every month to criticize what it sees as too rigorous underwriting standards — requiring FICO scores that are too high, particularly for first-time home buyers.
The Fed survey showed 24.6% of the banks saw mortgage application volume as "moderately higher" more banks, 24, saw application volume "moderately lower."
For refis, especially sensitive to rising rates, the responses were predominantly on the negative said, with 60.3% of the 68-bank sample for that question saying application volume was "substantially lower" on top of the 32.4% that saw "moderately lower" application volume.
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