Approximately 10% of U.S. banks have reported an increased demand for commercial real estate (CRE) loans, the strongest reading since early 2006, according to the Federal Reserve Board's January 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices. However, the U.S. banks have also indicated that they had tightened some terms on CRE loans over 2010, while approximately 20% of the surveyed banks stated that they reduced the sizes of lines of credit for commercial construction.
The survey found that about 40% of domestic banks, on net, reported having tightened loan-to-value ratios, and moderately smaller fractions tightened debt service coverage ratios and maximum loan sizes. Spreads, maximum maturities and requirements for takeout financing were reportedly little changed on net. Moderate net fractions of foreign banks indicated that they had eased some terms, including maximum loan sizes, spreads and requirements on debt-service coverage ratios.
In comparison, the Fed's survey found that standards on prime closed-end residential real estate loans were little changed, on balance, over the fourth quarter of 2010, although standards on nontraditional residential mortgage loans were reportedly tightened by about 15% of banks.
The full survey is available online.
SOURCE: Federal Reserve Board
