MNI BRIEF: US Loan Officers See Tighter Credit, Weaker Demand

U.S. banks generally tightened lending standards for commercial and industrial loans in the first quarter and also reported weaker demand, citing a less favorable or more uncertain economic outlook, less tolerance for risk, and worsening of industry-specific problems, the Federal Reserve said in its April 2024 Senior Loan Officer Opinion Survey on Bank Lending Practices, or SLOOS.

Large banks said they left most lending standards and terms unchanged.

The Fed survey also asked about commercial real estate loans in particular, and banks reported having tightened all queried lending policies, including the spread of loan rates over the cost of funds, maximum loan sizes, loan-to-value ratios, debt service coverage ratios, and interest-only payment periods, the survey said. (See MNI INTERVIEW: US Services Shrink For First Time Since 2022-ISM)