Senior Loan Officer Opinion Survey Asks Banks About Standards Since 2005


The Federal Reserve’s latest Senior Loan Officer Opinion Survey shows an array of responses on the lending practices of various banks as of the second quarter of 2019 among various loan classes. The three main categories of these loans are residential real estate loans, commercial & industrial (C&I) loans, and commercial real estate (CRE) loans. In this quarter, the survey consisted of a special set of questions on the reported lending standards relative to the midpoint of the range of lending standards exhibited by each of the banks since 2005, i.e., prior to the Great Recession. Banks offered their responses on these special set of questions in addition to the questions relating to the three main loan categories.

The following figures focus on banks’ lending standards on and reported demand for two specific types of loans: “qualified mortgage” (QM) jumbo loans and multifamily, CRE loans.

QM jumbo loans are qualified residential mortgages that exceed the loan limits set by the Federal Housing Finance Agency , which in many non-high cost markets represent a home purchase requiring a mortgage of more than $484,350. Since the last quarter of 20141, banks’ lending standards on these loans have stayed the same relative to the reported demand for them. Interestingly, the demand for QM jumbo loans has increased in 2019 thus far.

Another class of loans surveyed were multifamily CRE loans, which include high-rise apartments.

The above figure shows that lending standards for loans on these properties increasingly tightened since the last quarter of 2013, reached a cycle high of tightness in the second quarter of 2016, and then eased. Financing demand for these properties, however, has been weakening for the last five years.

The last component of the Senior Loan Officer Opinion Survey consisted of questions relating to banks’ lending standards relative to the midpoint of the range of lending standards exhibited since 2005, which was late in the previous expansion. Compared with the July 2018 survey, across most residential real estate loan categories, the share of banks that had reported a tightening noticeably declined from the previous year. However, the level of subprime residential mortgage lending was the most consistently tight.

  1. The last quarter of 2014 is the earliest year-quarter period for which there exist data on this series.

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