Fed survey reveals strong loan demand
The Federal Reserve Monday released its third-quarter senior loan officer opinion survey (SLOOS), which revealed "stronger loan demand, but tighter underwriting standards, particularly for subprime applicants," said NAFCU Chief Economist and Vice President of Research Curt Long.
"This is consistent with the overall economic outlook, which has improved a bit, although risks of a downturn remain elevated," Long added.
Over the quarter, banks reported tightening standards across all type of commercial real estate loan categories, while the demand for loans secured by non-farm, non-residential, and multifamily properties remained unchanged.
Of note, banks left residential real estate loan categories unchanged; however, a significant number of banks reported stronger demand for most categories of closed-end residential real estate loans. Additionally, banks reported increased demand for auto and credit loans.
The third-quarter SLOOS also included special questions asking banks to assess the likelihood of approving credit card and auto loan applications by borrower FICO score in comparison with the beginning of the year. Survey respondents indicated that they were less likely to approve loans for borrowers with FICO scores of 620, while they were about as likely to approve such loans for borrowers with scores of 720.
This senior loan officer survey was based on responses from 76 domestic banks and 22 U.S. branches and agencies of foreign banks.
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