The Federal Reserve has reported that a significant number of banks have tightened their standards for all types of commercial real estate loans in the second quarter. According to the Fed’s Senior Loan Officer Opinion Survey on Bank Lending Practices, many “other” banks have implemented stricter requirements for all categories of CRE loans, while large banks’ standards remained mostly unchanged.
In addition, the Fed found that there was a moderate decrease in demand for CRE loans across all types of banks. Foreign banks also experienced similar tightening in their lending practices, but unlike domestic banks, they saw an increase in demand for these types of loans during this time period.
This trend towards tighter lending standards is not limited to just the commercial real estate sector. The survey also revealed a general move towards stricter lending practices in commercial and industrial (C&I) lending. Many lenders cited reasons such as economic uncertainty and industry-specific issues as key factors influencing their decision to tighten C&I loan requirements. Other important considerations included reduced risk tolerance and concerns about legislative changes or supervisory actions affecting loan terms.
