Residential Real Estate and HELOCs: Tighter Standards, Weaker Demand

Mortgage News February 17, 2023

Changes in the standards and terms of business and household bank loans over the last three months, which roughly corresponds to the fourth quarter of 2022 were addressed in the Bank Lending Practices Senior Loan Officer Opinion Survey (SLOOS).

As far as commercial and industrial (C&I) loans to large, middle-market, and small firms are concerned, survey respondents indicated tighter standards and weaker demand in the fourth quarter. All commercial real estate (CRE) loan categories were reported to have weaker demand and tighter standards by banks.

All categories of residential real estate (RRE) loans to households were tightened or remained basically unchanged by banks, and the demand for these loans declined according to reports from banks. A tightening of standards coupled with lower demand for home equity lines of credit (HELOCs) was also reported by banks. For credit cards, auto loans, and other consumer loans, standards tightened and demand decreased.

There was a steady tightening or basically no change in lending standards for all RRE loan types and HELOCs during the fourth quarter. A modest share of banks reported tighter standards for jumbo and subprime residential mortgages, while a modest share reported tighter standards on HELOCs, qualified mortgages (QM), non-jumbo non-government-sponsored enterprises (GSEs), and non-QM non-jumbo mortgages. GSE-qualified and government-backed residential mortgage standards, however, remained relatively unchanged.

Meanwhile, significant net shares of banks indicated fewer RRE loans were sought in the fourth quarter, except for HELOCs, for which a substantial net share of banks indicated weaker demand.

Contact Us/Order Samples

For any questions OR a sample of the records please submit the following form.

Submit your comments, questions, or requests below. If you include your phone number, we will call you back.


I am Interested In: