Large banks are becoming more flexible than their smaller counterparts on residential lending. A similar trend was reported for commercial mortgages.
The findings were discussed in the October 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board.
A total of 76 domestic banks and 22 U.S. branches and agencies of foreign banks participated in the survey, which looked at how lending conditions have changed compared to three months earlier.
Of the 72 banks that make prime residential loans, 83 percent said standards were unchanged. At just large banks however, the share dropped to three-quarters — with the remaining quarter saying standards had somewhat eased.
Demand for purchase financing from prime borrowers was relatively unchanged at 60 percent of lenders. But more than a quarter of large banks said demand slipped, while an equal share of smaller banks noted a moderate increase.
Nearly 83 percent of the 35 nontraditional lenders indicated that lending guidelines had remained stable. At large banks, 15 percent indicated standards had somewhat eased, while 13 percent of smaller banks noted some degree of tightening.
More than two-thirds of nontraditional lenders said demand for purchase loans was little changed, and over a quarter said it was moderately weaker.
Four of the six subprime lenders surveyed said their standards hadn’t changed much, and the remaining two were evenly split over whether subprime standards had somewhat tightened or eased.
Subprime loan demand was mostly unchanged at five of the lenders, while the other one — a smaller bank — reported moderately weaker demand.
Almost all of the 72 banks that make home-equity lines of credit said standards hadn’t really changed.
More than two-thirds of HELOC lenders hadn’t seen much change in demand, while 18 percent said demand moved slightly higher and 13 percent noted slightly less demand.
While more than 90 percent of the 75 banks that make nonfarm, nonresidential commercial real estate loans said standards were much same as they were three months earlier, more than 10 percent of large banks noted a slight easing.
CRE demand hardly changed at 70 percent of banks. More than a quarter indicated strengthening demand, and the share jumped to 31 percent at just smaller banks.
Most of the 74 banks that make construction-and-land-development loans indicated credit standards have changed little over the past three months — though 16 percent of large banks said standards had eased somewhat.
Demand for C&D loans was hardly changed at more than two-thirds of the lenders. Nearly a quarter said demand was moderately stronger — with smaller banks seeing an even greater increase.
More than three-quarters of the 75 multifamily lenders said guidelines had changed little. However, 14 percent of smaller banks said they had somewhat tightened, while 21 percent of large banks indicated a slight loosening.
Demand for apartment loans didn’t vary from three months earlier at more than two thirds of multifamily lenders. More than a quarter noted moderately stronger demand.
