Senior Loan Officer Opinion Survey on Bank Lending Practices
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The January 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices
The January 2026 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 2025.1
Regarding loans to businesses, 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 and basically unchanged demand for C&I loans to small firms on net.2 Furthermore, banks reported generally unchanged standards and stronger 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 eased for auto loans and remained basically unchanged for credit card and other consumer loans, while demand weakened for auto and other consumer loans but remained basically unchanged for credit card loans.
The January SLOOS included a set of special questions inquiring about banks' expectations for changes in lending standards, borrower demand, and loan performance over 2026. Banks reported expecting lending standards generally to remain unchanged and demand to strengthen across all loan categories. In addition, banks reported expecting loan quality to remain around current levels for C&I loans to large and middle-market firms but to deteriorate for C&I loans to small firms; to improve for CRE loans; and to deteriorate for RRE and most consumer loan categories.
A second set of special questions queried banks about their likelihood of approving loans to firms with various levels of exposure to artificial intelligence (AI) in comparison to the beginning of 2025 and their assessment of the impact of AI on selected industries. Banks reported, on net, being more likely to approve loans to firms benefiting from high AI exposure and less likely to approve loans to firms adversely affected by high AI exposure. The likelihood of C&I loan approval to firms with little AI exposure was reportedly unchanged. Regarding the impact of AI on different sectors, banks reported that AI had a beneficial effect for all queried sectors, on balance, with some variation in how widely such benefits were reported.
Lending to Businesses
(Table 1, questions 1–12 and 41–42; table 2, questions 1–8 and 17–18)
Questions on commercial and industrial lending. Over the fourth quarter, modest net shares of banks reported having tightened standards on C&I loans to firms of all sizes.3 Meanwhile, moderate net shares of banks reported lower costs of credit lines and narrower spreads on C&I loans to large and middle-market firms, and a modest net share of banks reported having tightened the maximum size of credit lines for small firms. All other queried C&I loan terms were reported as basically unchanged.4 Foreign banks also reported that standards and most terms for C&I loans remained basically unchanged.5
Among banks that reported having eased C&I loan standards or terms, all cited more aggressive competition from other lenders as an important reason for doing so. Further, significant net shares of such banks cited a more favorable or less uncertain economic outlook and increased liquidity in the secondary market for these loans as important. In contrast, among banks that reported having tightened standards or terms for C&I loans, major net shares cited a less favorable or more uncertain economic outlook, a reduced tolerance for risk, and increased concerns about the effects of legislative changes, supervisory actions, or changes in accounting standards as important reasons for doing so.
The January SLOOS included a set of special questions inquiring about the likelihood in comparison to the beginning of 2025 of approving C&I loans to firms with varying levels of exposure to AI as well as the degree to which borrowers in various sectors have experienced beneficial or harmful impacts from AI. In response, a moderate net share of banks reported a higher likelihood of approving C&I loans to firms benefiting from AI, while a major net share of banks reported being less likely to approve such loans to firms adversely affected by AI. Meanwhile, for firms with little exposure to AI, the likelihood of C&I loan approval was reportedly unchanged. Moreover, banks reported that AI had beneficial effects on their borrowers in all queried sectors.6
Regarding demand for C&I loans over the fourth quarter, a moderate 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, as reported by major net shares of banks, were increased customer financing needs for merger or acquisition, for inventory, and for investment in plant or equipment.
Questions on commercial real estate lending. Over the fourth quarter, a modest net share of banks reported having eased standards for loans secured by multifamily properties, while standards for construction and land development loans and loans secured by nonfarm nonresidential properties remained basically unchanged on net. However, these responses differed across bank size categories, as large banks reported having eased and other banks reported having tightened standards for CRE loans on balance.7 Meanwhile, a modest net share of foreign banks reported having eased CRE loan standards.
Regarding demand for CRE loans, moderate and modest net shares of banks reported stronger demand for nonfarm nonresidential and construction and land development loans, respectively, while demand for loans secured by multifamily properties was basically unchanged. These responses were mixed across bank size categories. Significant net shares of large banks reported stronger demand for all CRE loan types, while demand was basically unchanged, on net, for most CRE loan types at other banks. In addition, a significant net share of foreign banks reported stronger demand for CRE loans over the fourth quarter.
Lending to Households
(Table 1, questions 13—26)
Questions on residential real estate lending.8 Banks reported having left standards basically unchanged over the fourth quarter for most RRE loan types, on balance, including home equity lines of credit (HELOCs). As exceptions, modest net shares of banks reported having eased standards for government-sponsored enterprise (GSE)-eligible mortgages and tightened them for subprime mortgages.
Meanwhile, banks reported weaker demand, on balance, for RRE loans over the fourth quarter. Moderate net shares of banks reported weaker demand for GSE-eligible, non-qualified mortgage (non-QM) loans and subprime mortgages, while modest net shares of banks reported weaker demand for all other mortgage loan categories. In contrast, a modest net share of banks reported stronger demand for HELOCs.
Questions on consumer lending. Over the fourth quarter, a modest net share of banks reported having eased standards for auto loans, while standards were basically unchanged for credit card and other consumer loans. Banks generally reported that terms across all consumer loan categories remained unchanged, except for modest net shares of banks lowering the extent to which auto and other consumer loans are granted to customers who do not meet credit scoring thresholds.9
Regarding demand for consumer loans, significant and moderate net shares of banks reported weaker demand for auto loans and other consumer loans, respectively, while demand for credit card loans remained basically unchanged over the fourth quarter.
Special Questions on Banks' Outlook for 2026
(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 2026, assuming that economic activity evolves in line with consensus forecasts. On balance, banks reported expecting lending standards to remain basically unchanged for most loan categories and demand to strengthen across all loan categories.10 Banks also reported having mixed expectations for the credit quality of C&I loans during 2026, in addition to expecting improvements for CRE loans and deteriorations for RRE and most consumer loan categories.
Banks reported expecting lending standards to remain basically unchanged, on net, for most loan categories over 2026. As exceptions, modest net shares of banks reported expecting to tighten standards for construction and land development loans and to ease standards for auto loans. Among banks that reported expecting to tighten lending standards over 2026, major net shares of banks cited a less favorable or more uncertain economic outlook, expected deteriorations in collateral values or the credit quality of their loan portfolio, and an expected reduction in risk tolerance as important reasons. In contrast, among banks that reported expecting to ease standards over 2026, major net shares cited an expected improvement in the credit quality of their loan portfolio, a more favorable or less uncertain economic outlook, and an increase in competition from other lenders as important.
Meanwhile, significant net shares of banks reported expecting stronger demand over 2026 for C&I loans to firms of all sizes, for loans secured by nonfarm nonresidential properties, and for RRE loans. Likewise, moderate or modest shares of banks reported expecting stronger demand, on balance, for all other loan types. Among banks that reported expecting stronger demand, major net shares cited an expected decline in interest rates and expected higher spending or investment needs as important.11
Expectations for credit quality over 2026—as measured by delinquencies and charge-offs—varied across loan categories. Banks reported expecting the quality of C&I loans to large and middle-market firms to remain basically unchanged, while a moderate net share of banks reported expecting a deterioration for C&I loans to small firms. Meanwhile, significant to moderate net shares of banks reported expecting improvements for all CRE loan types. In contrast, moderate and modest net shares of banks reported expecting deteriorations for GSE-eligible loans and nonconforming jumbo mortgage loans, respectively. Further, significant net shares of banks reported expecting deteriorations in credit quality for credit card and auto loans to nonprime borrowers, and a modest net share of banks reported expecting so for auto loans to prime borrowers. The quality of credit card loans to prime borrowers was reportedly expected to remain unchanged on balance.
This document was prepared by Luke Morgan, with the assistance of Meghan Carpenter, David Glancy, and Bernardo Morais, Division of Monetary Affairs, Board of Governors of the Federal Reserve System.
1. Responses were received from 60 domestic banks and 18 U.S. branches and agencies of foreign banks. Respondent banks received the survey on December 10, 2025, and responses were due by January 2, 2026. 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 share" (or, alternatively, "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. As exceptions, modest net shares of foreign banks reported having eased collateralization requirements and loan covenants. Return to text
6. Major net shares of banks reported that AI had a beneficial effect on firms in digital infrastructure and hardware manufacturing; transportation, logistics, and commerce; and energy and utility sectors. Significant net shares of banks reported so for firms in knowledge-intensive business and professional services, traditional manufacturing and construction, and personal and community service sectors. Return to text
7. Large banks are defined as those with total domestic assets of $100 billion or more as of September 30, 2025. Other banks are defined as those with total domestic assets of less than $100 billion as of September 30, 2025. Return to text
8. The seven categories of residential home-purchase loans that banks are asked to consider are GSE-eligible, government, qualified mortgage (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
9. 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), the 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
10. Large banks generally reported expecting to ease standards for most loan categories, while other banks reported expecting to tighten standards for most loan categories on balance. Return to text
11. In addition, significant net shares of banks cited all other queried reasons for expecting stronger demand as important. Return to text