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Comment: Fed’s Senior Loan Officer Opinion Survey for April showed overall conditions little changed

The Fed’s Senior Loan Officer Opinion Survey for April – which roughly corresponds to the first quarter 2019 – did not suggest any significant changes in the supply of and demand for loans early in 2019.

The April survey noted that for commercial and industrial (C&I) loans that standards were “basically unchanged” if terms were a bit easier for medium- and large-sized firms, while small businesses saw about unchanged standards and terms. Demand for business loans were down for all sizes of businesses. Commercial real estate (CRE) loans for all categories had tighter standards while at the same time demand was down.


The survey special question on lending exposure to Asia and Europe suggested that lenders anticipate “the quality of loans to exposed firms to deteriorate with respect to current levels over the remainder of 2019. Banks that have taken steps to mitigate risk of loan losses from such exposures reported the tightening of lending policies on new credit to exposed firms as the most frequently used action over the past year.”

Responses to another special question indicated that competition among lenders for CRE loan customers had led to easier lending terms “including maximum loan size, maximum loan maturity, and the spread of loan rates over their costs of funds”.

The survey said that loans to households saw some tighter standards for credit card loans, whereas other types of lending – autos and residential real estate (RRE) – were about unchanged. Consumer demand for loans for RRE and credit cards was weaker, and that for autos about the same. Some of that may be related to the disruptions from the partial federal government shutdown while many consumers were more worried about taking on debt against a less certain outlook for the economy. This may improve in the next iteration of the survey. Banks reported a greater willingness to lend than in the prior report, but late 2018 through early 2019 was the lowest since January 2017. If consumers were less confident about borrowing, banks were more so as consumers were more widely employment and seeing modest wage increases.

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