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The January 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices

The January 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the fourth quarter of 2024.1

Regarding loans to businesses over the fourth quarter, survey respondents reported, on balance, tighter lending standards for commercial and industrial (C&I) loans to firms of all sizes. Meanwhile, banks reported stronger demand for C&I loans to large and middle-market firms, while demand for C&I loans to small firms remained basically unchanged.2 Furthermore, banks generally reported tighter standards and basically unchanged demand for commercial real estate (CRE) loans.

For loans to households, banks reported, on balance, basically unchanged lending standards and weaker demand across most categories of residential real estate (RRE) loans. In addition, standards reportedly tightened for credit card loans and remained basically unchanged for auto and other consumer loans, while demand weakened for credit card and other consumer loans but remained basically unchanged for auto loans. Further, banks reported basically unchanged lending standards and demand for home equity lines of credit (HELOCs).

The January SLOOS included a set of special questions inquiring about banks’ expectations for changes in lending standards, borrower demand, and loan performance over 2025. Banks reported expecting lending standards to either ease or remain basically unchanged and demand to strengthen across all loan categories. In addition, banks generally reported expecting loan quality to improve for loans to businesses but to either deteriorate or remain basically unchanged for most consumer loan types.

Lending to Businesses

(Table 1, questions 1–12; table 2, questions 1–8)

Questions on commercial and industrial lending. Over the fourth quarter, modest and moderate net shares of banks reported having tightened standards on C&I loans to large and middle-market firms and to small firms, respectively.3 Meanwhile, banks reported mixed changes to C&I loan terms over the fourth quarter.4 Moderate and modest net shares of banks reported charging higher premiums on riskier loans to large and middle-market firms and to small firms, respectively, while modest net shares of banks reported more frequent use of interest rate floors and tighter collateralization requirements to firms of all sizes. In contrast, modest net shares of banks reported narrowing interest rate spreads over the cost of funds and reducing the costs of credit lines to firms of all sizes. The remaining terms on C&I loans were basically unchanged, on net, to firms of all sizes. Foreign banks also reported that standards and most terms for C&I loans remained basically unchanged, except for a modest net share that reported increasing the costs of credit lines.

Among banks that reported tightening standards and terms for C&I loans, major net shares cited a less favorable or more uncertain economic outlook, the worsening of industry-specific problems, and a reduced tolerance for risk as important reasons for doing so. In contrast, among banks that reported easing standards or terms on these loans, major net shares cited more aggressive competition from other lenders and a more favorable or less uncertain economic outlook.

Regarding demand for C&I loans over the fourth quarter, a modest net share of banks reported stronger demand from large and middle-market firms, while demand from small firms remained basically unchanged on net. In addition, a moderate net share of banks reported an increase in the number of inquiries from potential borrowers regarding the availability and terms of new credit lines or increases in existing lines. Furthermore, a significant net share of foreign banks reported stronger demand for C&I loans.

The most frequently cited reasons for stronger demand, reported by major net shares of banks, were increased customer investment in plant or equipment and increased customer financing needs for inventory, accounts receivable, and merger or acquisition.

Questions on commercial real estate lending. Over the fourth quarter, modest net shares of banks reported having tightened standards for construction and land development loans as well as loans secured by nonfarm nonresidential properties, while standards for loans secured by multifamily properties remained basically unchanged on net. These responses were similar across large and other banks.5 Foreign banks reported that, on balance, standards for CRE loans remained basically unchanged.

Regarding demand for CRE loans, a modest net share of banks reported weaker demand for construction and land development loans, while demand was basically unchanged for other types of CRE loans. These responses were mixed across bank size categories. Modest net shares of large banks reported stronger demand for loans secured by nonfarm nonresidential and multifamily properties. Meanwhile, demand was basically unchanged for construction and land development loans at large banks. In contrast, modest to moderate net shares of other banks reported weaker demand across all CRE loan types over the fourth quarter. In addition, a significant net share of foreign banks reported stronger demand for CRE loans.

Lending to Households

(Table 1, questions 13–26)

Questions on residential real estate lending.6 Banks reported having left standards basically unchanged over the fourth quarter for most RRE loan types, on balance, except for subprime and non-qualified mortgage (QM) jumbo mortgages, for which modest net shares of banks reported having tightened standards.7 Similarly, banks reported that standards for HELOCs remained basically unchanged.8

Meanwhile, banks reported weaker demand, on balance, for most RRE loan categories over the fourth quarter. A significant net share of banks reported weaker demand for subprime mortgages, and moderate net shares of banks reported weaker demand for non-QM non-jumbo, GSE-eligible, government, and QM non-jumbo non-GSE-eligible mortgages. Additionally, a modest net share of banks reported weaker demand for QM jumbo mortgages, while demand for non-QM jumbo mortgages and HELOCs remained basically unchanged.9

Questions on consumer lending. Over the fourth quarter, a modest net share of banks reported having tightened standards on credit card loans, while standards were basically unchanged for auto and other consumer loans on balance. Banks reported having tightened most queried terms on credit card loans, with a moderate net share of banks increasing minimum credit score requirements and modest net shares tightening credit limits and lowering the extent to which loans are granted to customers that do not meet credit scoring thresholds.10 In contrast, most queried terms for auto and other consumer loans remained basically unchanged on net.11

Regarding demand for consumer loans, modest net shares of banks reported weaker demand for credit card and other consumer loans over the fourth quarter, while demand for auto loans remained basically unchanged.12

Special Questions on Banks’ Outlook for 2025

(Table 1, questions 27–40; table 2, questions 9–16)

The January SLOOS included a set of special questions inquiring about banks’ expectations for changes in lending standards, borrower demand, and asset quality over 2025, assuming that economic activity evolves in line with consensus forecasts. On balance, banks reported expecting lending standards to either ease or remain basically unchanged and demand to strengthen across all loan categories. Banks also reported expecting credit quality to improve for most business loan types during 2025, and to either deteriorate or remain basically unchanged for most household loan types.

Regarding lending standards, modest net shares of banks reported expecting to ease standards for CRE loans secured by multifamily properties, for GSE-eligible residential mortgages, and for auto loans. Meanwhile, banks reported expecting standards to remain basically unchanged for all remaining loan types over 2025 on net. The most frequently cited reasons for expecting lending standards to ease, cited by major net shares of banks, were a more favorable or less uncertain economic outlook, an expected increase in competition from other lenders, an expected increase in risk tolerance, and an expected improvement in credit quality of their loan portfolio.

Meanwhile, major net shares of banks reported expecting stronger demand for C&I loans to firms of all sizes over 2025; significant net shares of banks reported expecting stronger demand for all CRE and RRE loan categories, as well as for auto loans; and a moderate net share of banks reported expecting stronger demand for credit card loans. Among banks who reported expecting stronger demand, major net shares cited an expected decline in interest rates and expected higher spending or investment needs due to more favorable or less uncertain income prospects as important.

Regarding expectations for credit quality—as measured by delinquencies and charge-offs—moderate or modest net shares of banks reported expecting improvements for C&I loans to large and middle-market firms, all CRE loan categories, and auto loans to prime borrowers.13 In contrast, modest net shares of banks reported expecting credit quality to deteriorate for GSE-eligible residential mortgages and for all queried consumer loan types to nonprime borrowers.14 Credit quality was expected to remain around current levels, on balance, for all other loan categories.

This document was prepared by Luke Morgan, with the assistance of Adrian Balderamos, Jack Keane, and Juan Morelli, Division of Monetary Affairs, Board of Governors of the Federal Reserve System.


1. Responses were received from 67 domestic banks and 20 U.S. branches and agencies of foreign banks. Respondent banks received the survey on December 16, 2024, and responses were due by January 3, 2025. Unless otherwise indicated, this summary refers to the responses of domestic banks. Return to text

2. Large and middle-market firms are defined as firms with annual sales of $50 million or more, and small firms are those with annual sales of less than $50 million. Return to text

3. For questions that ask about lending standards or terms, “net fraction” (or “net percentage”) refers to the fraction of banks that reported having tightened (“tightened considerably” or “tightened somewhat”) minus the fraction of banks that reported having eased (“eased considerably” or “eased somewhat”). For questions that ask about loan demand, this term refers to the fraction of banks that reported stronger demand (“substantially stronger” or “moderately stronger”) minus the fraction of banks that reported weaker demand (“substantially weaker” or “moderately weaker”). For this summary, when standards, terms, or demand are said to have “remained basically unchanged,” the net percentage of respondent banks that reported either tightening or easing of standards or terms, or stronger or weaker demand, is greater than or equal to 0 and less than or equal to 5 percent; “modest” refers to net percentages greater than 5 and less than or equal to 10 percent; “moderate” refers to net percentages greater than 10 and less than or equal to 20 percent; “significant” refers to net percentages greater than 20 and less than 50 percent; and “major” refers to net percentages greater than or equal to 50 percent. Return to text

4. Lending standards characterize banks’ policies for approving applications for a certain loan category. Conditional on approving loan applications, lending terms describe banks’ conditions included in loan contracts, such as those listed for C&I loans under question 2 to both domestic and foreign banks and those listed for credit card, auto, and other consumer loans under questions 21–23 to domestic banks. Thus, standards reflect the extensive margin of lending, while terms reflect the intensive margin of lending. With respect to C&I loans, banks were asked about the costs, maximum size, and maximum maturity of credit lines; spreads of loan rates over the bank’s cost of funds; premiums charged on riskier loans; terms on loan covenants; collateralization requirements; and the use of interest rate floors. Return to text

5. Large banks are defined as those with total domestic assets of $100 billion or more as of September 30, 2024. Other banks are defined as those with total domestic assets of less than $100 billion as of September 30, 2024. Return to text

6. The seven categories of residential home-purchase loans that banks are asked to consider are government-sponsored enterprise (GSE)-eligible, government, QM non-jumbo non-GSE-eligible, QM jumbo, non-QM jumbo, non-QM non-jumbo, and subprime. See the survey results tables that follow this summary for a description of each of these loan categories. The definition of a QM was introduced in the 2013 Mortgage Rules under the Truth in Lending Act (12 C.F.R. pt. 1026.32, Regulation Z). The standard for a QM excludes mortgages with loan characteristics such as negative amortization, balloon and interest-only payment schedules, terms exceeding 30 years, alt-A or no documentation, and total points and fees that exceed 3 percent of the loan amount. For more information on the ability to repay (ATR) and QM standards under Regulation Z, see Consumer Financial Protection Bureau, "Ability-to-Repay/Qualified Mortgage Rule," webpage, https://www.consumerfinance.gov/rules-policy/final-rules/ability-to-pay-qualified-mortgage-rule. In addition, a loan is required to meet certain price-based thresholds included in the General QM loan definition, which are outlined in the Summary of the Final Rule; see Consumer Financial Protection Bureau (2020), "Qualified Mortgage Definition under the Truth in Lending Act (Regulation Z): General QM Loan Definition," final rule (Docket No. CFPB-2020-0020), Federal Register, vol. 85 (December 29), pp. 86308–09, https://www.federalregister.gov/d/2020-27567/p-17. Return to text

7. Modest to moderate net shares of large banks reported easing standards for all RRE loan types except for subprime mortgages, for which standards remained unchanged. Moreover, while a modest net share of large banks reported easing standards for non-QM jumbo loans, a moderate net share of other banks reported tightening standards for such loans. Return to text

8. A modest net share of large banks reported easing standards for HELOCs over the fourth quarter, while a modest net share of other banks reported tightening standards for HELOCs. Return to text

9. Modest net shares of large banks reported stronger demand for non-QM jumbo mortgages, while modest net shares of other banks reported weaker demand for such loans. Return to text

10. Banks were asked about changes in credit limits (credit card accounts only), maximum maturity (auto loans and other consumer loans only), loan rate spreads over costs of funds, the minimum percent of outstanding balances required to be repaid each month (credit card accounts only), minimum required down payment (auto loans and other consumer loans only), the minimum required credit score, and the extent to which loans are granted to borrowers not meeting credit scoring thresholds. Return to text

11. As exceptions, a modest net share of banks reported narrower interest rate spreads charged on outstanding balances for auto loans, while for other consumer loans, modest net shares of banks reported higher minimum credit score requirements and a lower extent to which loans are granted to customers that do not meet credit scoring thresholds. Return to text

12. Moderate net shares of large and other banks reported stronger and weaker demand, respectively, for auto loans over the fourth quarter. Return to text

13. Significant net shares of large banks reported expecting improvements in credit quality for C&I loans to firms of all sizes, while modest net shares of other banks reported expecting credit quality to deteriorate for such loans. Return to text

14. For auto loans to nonprime borrowers, moderate net shares of large and other banks reported expecting improvement and deterioration in credit quality, respectively. Return to text

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Last Update: February 03, 2025