WASHINGTON, DC—US banks stepped up their commercial real estate loan lending in the first quarter while easing terms, according to the April 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices.

On balance, the Fed reported, banks eased their lending policies for commercial and industrial and commercial real estate loans. At the same time, these institutions reported stronger demand for both types of loans over the quarter.

More domestic banks reported that they had eased rather than tightened standards on each of the three categories of CRE loans included in the survey: construction and land development loans, loans secured by nonfarm nonresidential structures, and loans secured by multifamily residential structures.

In each of these categories, reports of stronger demand also outnumbered reports of weaker demand.

The April survey also included a special question regarding changes in specific lending policies for CRE loans over the past year.

During the past 12 months, many more domestic banks reported having reduced rather than increased spreads on CRE loans. More domestic banks also reported having eased rather than tightened policies regarding the maximum size and maturity of such loans and having increased rather than decreased the market areas served.

These banks indicated few changes in their policies for debt service coverage ratios, loan-to-value ratios, or requirements for take-out financing.

In addition, several foreign respondents reported having decreased spreads, while few reported changes in other terms.

Instant Insights /

CRE Bank Lending Increases; Terms Ease in Q1

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