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The Federal Reserve Boards Beige Book said that lenders are cautious on residential lending but "fiercely competitive" over commercial lending.
September 3 -
Loan demand seems to be returning, but not fast enough for many bankers and their investors. Bankers discuss the various things holding back a return to blow-out quarters of loan growth.
June 10
Demand for commercial real estate and business loans continued to rebound in many regions of the country over the past six weeks, the Federal Reserve Board said Wednesday.
The Fed's Beige Book a snapshot of economic activity said "commercial construction and real estate activity grew" in most of the Fed's 12 regional districts.
The Federal Reserve Bank of Cleveland reported that demand for business credit was "broad based." Demand "was strongest for commercial real estate and construction loans and C&I lending to manufacturers," the bank said. Meanwhile, the Atlanta bank said "multifamily construction continues to increase across much of the district."
The New York, Richmond, Chicago, Kansas City Dallas and San Francisco districts also noted a pickup in CRE lending.
Overall, the 12 district banks reported that economic activity continued to grow at a moderate pace, with price pressures remaining subdued and credit standards generally unchanged.
Two districts reported that competition among lenders is heating up.
The Philadelphia bank noted that competition is "intense" for small business customers. "Some contacts also cited risky loan terms that they would not match; one described the market as 'frothy,'" the bank said.
The San Francisco district also reported intense competition among lenders for high-quality customers. "Contacts reported that this competition had depressed interest rates on loans, reducing net interest margins and profitability."
Reports on consumer lending and demand for single-family mortgages were mixed. "Demand for residential real estate loans was slightly weaker" in the Cleveland district, the bank said, compared to the last Beige Book survey in August.
The Dallas bank, which is located in the hottest housing market in the U.S., said "mortgage lending grew slightly, but contacts noted that the low supply of housing was constraining growth."
Meanwhile, there were no reports of deterioration in credit quality as delinquency rates continue to decline.
The San Francisco bank reported that "asset quality improved since the previous reporting period, and contacts reported that current overall loan performance was comparable to that seen before the recession."
The New York bank reported "ongoing declines in delinquency rates, particularly for commercial loans and mortgages."
