Due to decreasing loan demand and tighter underwriting standards, as well as other factors such as charge-offs, or losses written off on loans, banks reported a general trend of modestly declining total loan balances.
From October to December, total residential mortgage balances across the twenty banks was essentially flat. The median percent change in total residential mortgage balances was a decrease of 1 percent.
For the same period, corporate loan balances decreased slightly. The median percent change in total loan balances across banks was a decrease of 1 percent. Ten banks experienced increases in total loan balances. The driver of the decrease was softening loan demand, particularly by smaller businesses, as noted by several banks.
Credit card borrowing increased, while available credit decreased. The median percent change in average total loan balance for U.S. credit cards was an increase of 2 percent. The median percent change in total used and unused commitments for U.S. credit cards was essentially flat. For banks with the largest credit card loan balances, the decrease was more marked.
In commercial real estate, renewals of existing accounts increased significantly, while new commitments decreased significantly. The median percent change in renewals of existing accounts was an increase of 55 percent. The median percent change in new commitments was a decrease of 19 percent. Many banks noted challenges in this space, including “negligible” residential home builder loan demand and weaker construction and development activity, softening with regards to retailers, an uncertain outlook with regards to office space, and the continued dislocation of the commercial mortgage backed securities (CMBS) market.