a Fed with a mission to increase liquidity.
WASHINGTON, DC-The Federal Reserve Bank’s October 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices shows a slow easing of lending standards among commercial real estate lenders, coupled with growing demand for these loans. In short, banks lending into this space are following the same trajectory as other lenders, albeit at a slower pace.
What is interesting is that survey identified greater demand for these loans than in previous surveys. Specifically, a fraction of banks that reported a strengthening of demand for CRE loans increased notably, to about 45% on net, the Fed reported. The Fed also found that on balance, a small fraction of domestic respondents to the October survey reported that standards on CRE loans had eased over the previous three months. Previous quarterly surveys have showed the lending standards as remaining the same.
These findings were replicated among branches and agencies of foreign banks involved in CRE lending―the percentage of respondents that reported easing standards was just under 10%, while a moderate fraction reported that demand for CRE loans had strengthened, on balance. Not that foreign banks—at least the European ones—are as active in this space as they once were. In a separate part of the survey, of the respondents that indicated that their banks compete with European banks for their business, a slight majority reported that they had experienced a decrease in competition from European banks over the past three months. However, the decrease did not appreciably boost business at their banks. A smaller but significant fraction of respondents indicated that a decrease in competition from European banks had increased business at their banks to some extent.
Leaving aside the issue of foreign lending, the survey is one piece of evidence pointing to a pick up in bank lending. Other signs are coming from the institutions themselves, such as BB&T to name one example. In a conference call to discuss the institution’s quarterly earnings, Kelly King, chairman and chief executive, discussed possibly funding apartment projects and office developments.