WASHINGTON - Demand for commercial loans has remained robust so far this spring, but mortgage lending has slowed, according to a Federal Reserve Board report released Wednesday.
The report said "demand for commercial and industrial loans was reported to be high in 11 districts, while Dallas noted a slight softening." The 12th district, the Federal Reserve Bank of Minneapolis, described commercial lending as "steady as she goes," noting that "businesses had adjusted well to a higher interest rate environment."
Yet mortgage lending activity "was generally flat to down in most areas as mortgage interest trended higher," according to the central bank's Beige Book covering March and the first three weeks in April.
Named for the color of its cover, the Beige Book is an economic conditions report compiled every six weeks by the 12 Federal Reserve banks to help central bankers set monetary policy. The Federal Open Market Committee is scheduled to meet next on May 16.
As the economy continued to grow solidly, credit quality was good and improved slightly, the report said. The Federal Reserve Bank of New York indicated that a quarter of the lenders that it surveyed reported "tightening overall credit standards, while none said their bank had eased standards."
"Contacts in virtually all [Fed] districts reported that business loan quality remained good, and some noted that banks were still tightening lending standards," according to the report.
Yet looking ahead, the Federal Reserve Bank of Philadelphia predicted slower growth in business lending "as a result of greater caution on the part of lenders as well as borrowers."
Some districts reported that high consumer confidence kept the demand for other types of loans, such as credit card and home equity, strong. With credit quality solid and improving, "banks in most areas continued to report difficulty attracting sufficient deposits to fund loans," the report said.
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