August 8, 2024 - The Fed this week published its July 2024 Senior Loan Officer Opinion (SLOO) Survey on Bank Lending Practices. Responses were received from 65 domestic banks and 20 U.S. branches and agencies of foreign banks. Though banks indicated they continued to tighten lending standards for most loan categories in 2Q24, the share of banks reporting tighter lending standards was lower than in 1Q24.    

The July SLOOS included special questions on the current level of lending standards relative to the midpoint that banks’ standards have ranged since 2005. (Since 2011, July surveys have included similar questions.) Banks reported that standards are currently tighter than the midpoints of the ranges for all loan categories. Relative to the year-ago survey, however, standards for loan categories other than residential real estate are more relaxed.

For 2Q24, respondents reported tighter standards and unchanged demand for commercial and industrial (C&I) loans and tighter standards and weaker demand for commercial real estate (CRE) loans. Lending standards for loans to households were unchanged and demand for residential real estate (RRE) loans weakened.    

In C&I loans, large banks reported lending standards and most terms were unchanged. Most other banks tightened lending standards and almost all terms, citing a more uncertain economic outlook, worsening industry-specific issues, reduced risk tolerance, and increased concerns about legislative changes, supervisory actions or changes in accounting standards. Tightening was most common on terms such as interest rate floors and risk premiums, as well as the reduction in the size of credit lines and stricter collateralization requirements.

While C&I demand was unchanged overall, foreign banks reported stronger demand due to increased inventory financing needs, merger or acquisition, accounts receivable and investment in plant or equipment.