Banks continue to ease lending standards

Northwestern Financial Review, Mar 1-Mar 14, 2005

Banks reported they have eased lending standards for commercial and industrial loans, and commercial real estate loans, according to the latest Senior Loan Officer Opinion survey from the Federal Reserve. The January survey said a small number of banks eased standards on residential mortgages over the past three months, while standards for consumer loans stayed the same.

Nearly 50 percent of U.S. banks in the survey said they trimmed spreads of loan rates over their cost of funds for large and middle-market borrowers; about one-fourth did so for small firms. About 45 percent of banks reported an increase in demand for C&I loans from large and middle-market firms, up from 25 percent in the October survey. Almost 30 percent indicated that demand from small firms had increased, about the same as in the previous survey.