FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie
WASHINGTON (Reuters) – Loan officers at U.S. banks reported keeping lending standards for business loans mostly unchanged in the third quarter but they tightened the terms for commercial real estate loans, a Federal Reserve survey showed on Monday.
The officers also said they were seeing weaker demand for business loans from firms but that interest in most commercial real estate loans changed little.
“Major shares of banks that reported reasons for tightening standards or terms on (business) loans cited a less favorable or more uncertain outlook; a reduced tolerance for risk; and a worsening of industry-specific problems as important reasons,” the U.S. central bank said in its quarterly survey.
U.S. banks previously reported keeping loan standards unchanged for many business loans while tightening commercial real estate loans in the second quarter.
Last week the Fed cut interest rates for the third time this year as insurance against economic headwinds caused by slowing global growth and the U.S.-China trade war, but signaled that it was now likely to hold rates steady unless there was a material deterioration in the U.S. economy.
Banks also reported tightening lending standards for credit card loans while standards for residential real estate loans and auto loans were unchanged, according to the survey.
The Fed surveyed loan officers at 76 domestic banks and 22 U.S. branches and agencies of foreign banks.
Reporting by Lindsay Dunsmuir; Editing by Susan Fenton