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The October 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices

November 07, 2016 / Source: FRB

Current survey | Full report (826 KB PDF)
Table 1 | Table 2 | Chart data
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The October 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months.1 This summary discusses the responses from 69 domestic banks and 21 U.S. branches and agencies of foreign banks.2

Regarding loans to businesses, the October survey results indicated that, on balance, banks left their standards on commercial and industrial (C&I) loans basically unchanged while tightening standards on commercial real estate (CRE) loans over the third quarter of 2016.3 Regarding the demand for C&I loans, a modest net fraction of domestic banks reported weaker demand from large and middle-market firms, while demand from small firms was little changed, on balance.4 Regarding the demand for CRE loans, a moderate net fraction of banks reported stronger demand for construction and land development loans, while demand for loans secured by multifamily residential and nonfarm nonresidential properties remained basically unchanged on net.

The survey included two special questions on C&I loan demand. The first asked for more detail on the reasons why customer borrowing from banks may have shifted to or from other sources of funding, and banks indicated that changes in both price and nonprice terms associated with other sources of funding contributed to the shifts.

A second special question asked respondents to assess the outlook for C&I loan demand over the next six months compared with current conditions. Banks reported that they generally expected C&I loan demand from firms of all sizes to remain basically unchanged, on balance, over the next six months.

Regarding loans to households, moderate net fractions of banks reported easing standards on loans eligible for purchase by government-sponsored enterprises (known as GSE-eligible mortgage loans), and modest net fractions of banks reported easing standards on loans categorized as QM jumbo and QM non-jumbo, non-GSE-eligible residential mortgages. The remaining categories of home-purchase loans were little changed on net. Banks also reported that demand for most types of home-purchase loans strengthened over the third quarter on net. Regarding consumer loans, on balance, banks indicated that changes in standards on consumer loans remained basically unchanged, while demand for auto and credit card loans rose.

A special survey question asked respondents to assess the likelihood of approving credit card applications by borrowers' FICO score in comparison to three months ago. A significant net fraction of banks reported they were less likely to approve credit card applications for borrowers with FICO scores of 620 (or equivalent) in comparison to three months ago. Meanwhile, moderate net fractions reported they were more likely to approve credit card applications from borrowers with FICO scores of 720 (or equivalent).

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