The Treasury Department's most recent bank lending survey, which covers activity at the top 22 recipients of government investments through the Capital Purchase Program (CPP), shows that outstanding loan balances fell 1% in June and new loan originations in all 22 banks surveyed rose by 13%.
The lending survey results show that total originations of loans by all respondents rose in five categories: mortgages, home equity lines of credit, commercial and industrial renewals and new commitments, and commercial real estate (CRE) renewals. Originations in three loan categories – credit cards, other consumer lending products and new CRE commitments – fell.
New-home purchases and seasonal renewals in C&I and CRE lending drove the increased origination levels, the Treasury says.
The department also notes that decreases in outstanding balances were caused by consumers' focus on paying down debt and reducing spending – the result of a weakening labor market and declines in household wealth.
In the CRE sector, the June survey results point to continuing poor market conditions and general caution by businesses. CRE loan balances at the 22 banks fell by 1%, and banks reported that demand for CRE loans remained well below normal levels, as businesses continue to focus on strengthening their balance sheets, reserving for future losses and downsizing.
Additionally, the lower demand for new loans reflected a surplus in the market, as the supply of office space has increased due to firms' downsizing and increased office vacancies.