Monday, May 29, 2023
HomeEconomyLending standards tighten, demand falls in Q1: Fed top loan officer survey

Lending standards tighten, demand falls in Q1: Fed top loan officer survey – Loan officers at major banks continued to tighten business lending standards in the first quarter of this year, reporting continued declines in consumer and business loan demand as interest rates persist for longer.

According to the Federal Reserve, approximately 44% of senior loan officers raised their Corporate Lending Standards’ April Senior Loan Officer Opinion Survey , released Monday, was up from .8% in the previous quarter.

Credit conditions continued to tighten as businesses continued to reduce their loan needs.

Consumers, meanwhile, are facing higher credit thresholds across loan categories including auto and real estate, but credit cards are “basically unchanged,” according to survey respondents.

Banks cited multiple reasons for the tightening of lending conditions and lower loan demand, the survey showed, including “a more uncertain economic outlook, reduced risk tolerance, deteriorating collateral values ​​and pressure on banks’ funding costs.” and liquidity position concerns”.

Looking ahead, optimism is low that tighter lending standards will be loosened soon, “survey suggests banks “expect to tighten standards across all loan categories.”

The recent collapse of several banks, including Silicon Valley Bank, has many concerned about the possibility of a credit crunch that could lead to a deeper and darker recession.



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