U.S. banks loosened business loan lending standards in fourth quarter 2017: Fed

WASHINGTON (Reuters) - Loan officers at U.S. banks reported easing lending standards on many business loans while tightening them for commercial real estate loans, a Federal Reserve quarterly survey showed on Monday.

The officers also said demand for business loans remained broadly unchanged while fewer customers applied for commercial real estate loans in the fourth quarter of last year.

“A moderate net percentage of banks reported they eased standards for (business) loans to large and middle-market firms over the past three months while lending standards remained basically unchanged...for loans to small firms,” the U.S. central bank said in its survey.

The Fed raised interest rates three times in 2017 and its benchmark lending rate is currently in a range of 1.25 percent to 1.50 percent.

It is widely expected to raise borrowing costs again when policymakers next meet on March 20-21 and has forecast three rate rises this year amid moderate economic growth, low unemployment and loose financial conditions.

Financial conditions generally tighten as the central bank lifts borrowing costs but so far they have remained loose. It is part of the reason why many Fed policymakers remain confident in continuing to gradually raise interest rates without stalling economic growth.

Banks also reported they had seen weaker demand for auto loans and residential mortgages, according to the survey.

The Fed surveyed loan officers at 71 domestic banks and 23 U.S. branches and agencies of foreign banks.

Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci