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Demand Falls, Requirements Stay Tight for Actual Property Loans in Q3 2023


Nov 10, 2023



In response to the Federal Reserve Board’s November 2023 Senior Mortgage Officer Opinion Survey (SLOOS), lending requirements tightened for all business actual property (CRE) mortgage classes and most residential actual property (RRE) classes within the third quarter of 2023. Furthermore, demand for RRE and CRE loans weakened throughout all classes over the quarter.

A better web proportion of banks reported tighter residential mortgage lending requirements in Q3 in comparison with Q2 throughout all classes of RRE loans besides authorities and subprime. The web share of banks that tightened requirements for subprime loans fell to 14.3% whereas simply 2.1% of banks, on web, reported stricter requirements for presidency loans.

In distinction, the share elevated from 19.6% to 26.0% for QM jumbo. The remaining mortgage classes all noticed comparatively modest will increase.

Whereas tightening relaxed for 2 RRE mortgage classes, no class was spared from declining demand in Q3. The web share of banks reporting weaker demand for all RRE loans practically doubled over the quarter, climbing from 30.9% to 56.8%. Declining demand was most widespread for subprime loans as 71.4% banks reported weaker demand, on web, up from 9.1% in Q2 2023.

Roughly two-thirds of banks reported tightened requirements for each multifamily loans in addition to all CRE building and improvement loans, on web, in Q3 relative to Q2.

Main shares (higher than 50%) of banks reported weaker demand for building and improvement (52.6%) and loans secured by multifamily properties (55.2%) within the third quarter. These shares had been little modified over the quarter however are increased than they had been one yr in the past.

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