Loan demand tracked the overall U.S. economy in June and the first half of July as growth was slight and spotty, the Federal Reserve Board reported Wednesday.
Demand rose modestly — particularly for real estate loans — across most of the Fed's 12 districts, the central bank said in its survey of economic conditions known as the Beige Book.
But demand for business loans and certain types of consumer credit was uneven. Consumer borrowing ranged from steady to increasing in the Atlanta, Chicago, Dallas and San Francisco districts, while weakening in the Kansas City district. Chicago, Kansas City, Dallas and San Francisco reported more commercial and industrial lending while New York, Cleveland and Atlanta reported less.
Loan demand overall was flat in New York, down in Richmond and Cleveland and up slightly most everywhere else, the Fed said. The districts that were up were cautious in their forecasts. Fed contacts in Atlanta, Dallas, and San Francisco "noted stiff competition for loan customers," the report said.
In Chicago, demand for credit was being dampened by "uncertainty over the effects of U.S. fiscal policy actions," the report said.
Large corporations in the Chicago district scaled back borrowing on global economic concerns while domestic midsize companies served as the region's "primary source" of growth, the Fed said. Long-term financing demand increased, as did demand for refinancing and capital replacement credit. Higher auto and mortgage refinancings drove a moderate increase in consumer lending.
Bankers in Dallas, meanwhile, expressed a "slightly more pessimistic outlook" on demand thanks "to European debt issues and regulatory and political uncertainty."
National banks in that district reported midsize corporations borrowed less while demand for auto and energy loans continued to rise. Regional banks and community banks reported upticks in commercial and industrial and commercial real estate borrowing. Consumer lending, meanwhile, was steady because of "strong mortgage demand" and a "healthy backlog" of loans.
San Francisco reported that "loan demand grew a bit" even as "businesses remained highly cautious in their capital spending plans and attitudes," the report found. The competition for "well qualified" small and midsize businesses had pressured loan rates and fees on business credits, while demand for auto loans helped send overall consumer borrowing higher.
New York was unchanged on the loan demand front, as an increase in home mortgages was offset by decline in C&I demand.
