Banks Report Weaker Demand And Tighter Lending Standards In Fed Survey
April 2024 (Q1) Senior Loan Officer Opinion Survey on Bank Lending Practices shows weakening demand for consumer loans.
The Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) recently published its findings for the first quarter of 2024, addressing lending standards, terms, and demand for bank loans among businesses and households.
For households, a modest net share of banks reported that lending standards tightened across some categories of loans, including Non-QM jumbo, Non-QM non-jumbo, subprime, and qualified mortgage (QM) non-jumbo, non-GSE-eligible mortgage loans. Lending standards remained about the same for GSE-eligible mortgages, government mortgages, and QM jumbo mortgages.
Large banks reported net easing of standards, while other banks reported net tightening of standards for most residential real estate (RRE) loans. Additionally, a moderate net share of banks reported weaker demand for HELOCs.
Over the first quarter, banks reported tightening lending standards and most terms, on net, for all consumer loan categories, including credit card loans.
Significant net shares of banks reported tightening lending standards for credit card loans, but only moderate and modest net shares of banks reported tightening standards for other consumer loans and auto loans, respectively.
Additionally, a significant net share of banks reported increasing the minimum credit score requirements for credit card loans, while only a moderate net share of banks reported doing the same for other consumer loans. Plus, a modest or moderate net share of banks reported decreasing the extent to which loans are granted to customers not meeting credit scoring thresholds and increasing spreads of interest rates over the cost of funds for all consumer loan categories.
Other queried terms and conditions were left unchanged on those loans, except for the credit limits for credit card loans.
As for demand, a moderate net share of banks reported weaker demand for credit card loans and other consumer loans in the first quarter. Also, a significant net share of banks reported weaker demand for auto loans.