FED SLOOS: Regarding loans to businesses, survey respondents, on balance, reported tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over Q3

• Banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories.


• For loans to households, banks reported that lending standards tightened across all categories of residential real estate (RRE) loans other than government residential mortgages, for which standards remained basically unchanged.


• Demand weakened for all RRE loan categories.


• Banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs).

Credit card and auto lending

• Credit card, auto, and other consumer loans, standards reportedly tightened, and demand weakened on balance.


• The October SLOOS included a set of special questions that asked banks to assess the likelihood of approving credit card and auto loan applications by borrower FICO score (or equivalent) in comparison with the beginning of the year...


• Banks reported that they were less likely to approve such loans for borrowers with FICO scores of 620 and 680 in comparison with the beginning of the year, while they were more likely to approve credit card loan applications and about as likely to approve auto loan applications for borrowers with FICO scores of 720 over this same period.

Changing standards

• (The October SLOOS also included a set of special questions that inquired about banks’ reasons for changing standards for all loan categories in the third quarter of 2023)


• Banks most frequently cited a less favorable or more uncertain economic outlook; reduced tolerance for risk; deterioration in the credit quality of loans and collateral values; and concerns about funding costs as important reasons for tightening lending standards over the third quarter.


• Among the banks that reported easing lending standards over the third quarter, the most frequently cited reasons were an improvement in the credit quality of loans and a more favorable or less uncertain economic outlook.

via Federal Reserve

Analysis details (19:02)

• Note,  Fed's Bostic (2024 voter) on Friday said it will not surprise that bank credit is tightening, as he said “I read the SLOOS but I didn’t really need to read it [the SLOOS] on this one because the messaging has been so consistent”.


• Fed Governor Cook earlier noted that banking sectors remains "sound and resilient overall" and acute stresses have abated.

06 Nov 2023 - 19:01- Fixed IncomeImportant- Source: Fed