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Fed Survey: Banks Tightened CRE Lending Standards in Q2
“Significant net shares of banks” reported having tightened standards for all types of commercial real estate loans in the second quarter, the Federal Reserve said. The Fed’s latest Senior Loan Officer Opinion Survey on Bank Lending Practices found that a sizable percentage of “other” banks reported such tightening for all CRE loan categories, while for large banks the CRE lending standards were basically unchanged.
Meanwhile, moderate net shares of banks reported weaker demand for all types of CRE loans, according to the Fed. “Similar to domestic banks, a moderate net share of foreign banks reported having tightened standards for CRE loans,” the Fed said. “However, in contrast to domestic banks, a moderate net share of foreign banks reported stronger demand for CRE loans over the second quarter.”
The loan tightening in the CRE sector occurred amid a broader move toward stricter lending standards in commercial and industrial lending. Among banks that tightened their C&I lending, a large percentage cited a less favorable or more uncertain economic outlook, worsening of industry-specific problems, a reduced tolerance for risk, and increased concerns about the effects of legislative changes, supervisory actions or changes in accounting standards as important reasons for doing so.
- ◦Financing
