Lending Standards Tighten for Residential and Commercial Real Estate Loans in Q1 2023


By David Logan on May 12, 2023 • According to the Federal Reserve Board’s April 2023 Senior Loan Officer Opinion Survey (SLOOS)—conducted for bank lending activity over the first quarter of 2023—banks reported that lending standards tightened for most residential real estate (RRE) and commercial real estate (CRE) loan categories. Demand for RRE and CRE loans weakened across all categories over the quarter.  No banks expected their lending standards for most loans to ease over the remainder of 2023 and one-third expected more tightening. Residential mortgage lending standards tightened the most for subprime loans as the net share of banks reporting tighter standards for these loans climbed from 14.3% to 33.3%. Banks also reported substantial tightening for non-QM non-jumbo, non-QM jumbo, QM jumbo, and QM non-jumbo non-GSE eligible RRE loans. In contrast, GSE-eligible (+0.1 ppt) and government (+0.1 ppt) loans each saw a small increase in the net percent of banks reporting tighter standards in Q1 2023 than Q4 2022. Demand weakened for all RRE loan categories and home equity lines of credit (HELOCs).  The net share of banks reporting weaker demand averaged 50.8% across loan categories. While high, it was a large improvement from the 87.4% average in Q4 2022. Banks tightened standards for all types of commercial real estate loans, on net, though tightening was more widely reported by mid-sized banks than the largest firms. Banks also reported weaker demand for construction and land development loans, loans secured by multifamily properties, and loans secured by nonfarm nonresidential properties. Banks reported having tightened all the terms surveyed on all categories of CRE loans over the past year. For multifamily and construction and land development loans, a substantial net share of banks widened the spread on loan rates, lowered the loan-to-value ratio, increased debt service coverage, and decreased maximum loan size. Related ‹ Building Materials Prices Decline in April Despite Increased Lumber CostsTags: bank lending, builder finance, construction finance, construction lending, finance, lending standards, mortgage finance, multifamily residential mortgages, residential mortgages, sloos, subprime

Lending Standards Tighten for Residential and Commercial Real Estate Loans in Q1 20232023-05-12T13:18:05-05:00

Consumer Credit Growth Slows in Q1 2023


By David Logan on May 8, 2023 • According to the Federal Reserve’s latest G.19 Consumer Credit report, the growth of total consumer credit outstanding slowed from 7.4% to 5.4% (seasonally adjusted annual rate) in the first quarter of 2023. Nonrevolving (excluding real estate debt) and revolving debt grew 3.1% and 12.3%, respectively, over the quarter. On an unadjusted basis, the level of nonevolving credit outstanding at the end of Q1 2023 was $3.6 trillion while the level of revolving debt—primarily credit card debt—was $1.2 trillion. Revolving and nonrevolving debt accounted for 24.6% and 75.4% of total consumer debt, respectively.  Revolving consumer credit outstanding as a share of the total decreased 0.6 percentage point over the quarter but remains 1.6 ppt above the Q1 2023 level. With every quarterly G.19 report, the Federal Reserve releases a memo item covering student and motor vehicle loans’ outstanding. The most recent release shows that the balance of student loans was $1.8 trillion (not seasonally adjusted) at the end of the first quarter while the amount of auto loan debt outstanding stood at $1.4 trillion (NSA). Together, these loans made up 88.8% of nonrevolving credit balances (NSA)—the smallest share since Q2 2011 and 2.1 ppts lower than the share in Q1 2022. Related ‹ Solid Job Growth in AprilTags: auto loans, consumer credit, consumer debt, finance, mortgage finance, non-revolving debt, nonrevolving debt, revolving debt, student loan debt, student loans

Consumer Credit Growth Slows in Q1 20232023-05-08T12:16:26-05:00

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