Fed announces: Loan demand has weakened

The Federal Reserve (Fed) has released its "Senior Loan Officer Opinion Survey" report regarding bank lending practices. Responses were received from 66 domestic and 20 foreign banks in the U.S. 

It was reported that the banks participating in the survey, which was prepared based on the responses received, indicated that standards were tighter and demand was weaker in the first quarter of this year regarding commercial and industrial loans provided to businesses, as well as commercial real estate loans.

POLICIES TIGHTENED

The report stated that banks also answered a series of special questions regarding changes in lending policies and demand for commercial real estate loans, noting that banks have tightened their lending policies for all commercial real estate loan categories.

Regarding household loans, the report pointed out that banks tightened credit standards in some categories of residential real estate loans while making no changes in others; it was also noted that standards tightened and demand weakened for credit cards, auto loans, and other consumer loans.

STARTED IN 2022

Banks in the U.S. began tightening access to credit as of 2022, largely as a result of high borrowing costs caused by the Fed's interest rate hikes.

The Fed, which began raising interest rates in 2022 in the face of high inflation in the U.S., had increased the policy rate to the 5.25-5.50 percent range, the highest level in 23 years.