WASHINGTON (Reuters) - Loan officers at U.S. banks reported easing lending standards for many business loans and for some commercial real estate loans, a Federal Reserve quarterly survey showed on Tuesday.
The officers also said demand for both types of loans had weakened in the first quarter of this year.
“On balance, they eased their standards and terms on commercial and industrial (C&I) loans to large and middle-market firms and left their standards unchanged for small firms,” the U.S. central bank said in its survey.
For commercial real estate, loan officers said standards were eased on nonfarm nonresidential loans while they were tightened for multifamily loans.
Overall, banks said they had eased important lending terms for all types of commercial real estate loans over the past year as well as maximum loan size. They cited competition from other banks and nonbank lenders as reason for the loosening.
The Fed raised interest rates three times in 2017 and did so again in March. The benchmark lending rate is currently in a range of 1.50 percent to 1.75 percent.
It is widely expected to raise borrowing costs again when policymakers next meet on June 12-13 and has forecast two rate rises this year amid a strong economy.
The unemployment rate fell to near a 17-1/2-year low of 3.9 percent, the Labor Department reported on Friday.
Banks also reported modestly tightening loan standards for auto and credit card loans, according to the survey. Both categories also saw weaker demand from consumers.
The Fed surveyed loan officers at 72 domestic banks and 22 U.S. branches and agencies of foreign banks.
Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci