After several quarters of aggressive tightening, banks eased up slightly in Q2 2025—but businesses and households showed little interest in taking on new debt.

By the numbers: The Fed’s latest Senior Loan Officer Opinion Survey (SLOOS) shows about 10% of banks raised standards on commercial and industrial (C&I) loans, a step down from the 19% reported in Q1.

Demand dynamics: Loan appetite weakened across the board. C&I borrowing saw the sharpest pullback, while nonresidential and construction-related CRE slipped moderately. Multifamily and mortgages were stable, and auto lending posted a small uptick. Roughly 30% of banks reported reduced demand from large and mid-sized firms—the lowest share since 2023.

CRE in focus: Conditions in commercial real estate remain tight but appear to be stabilizing. Standards for nonfarm nonresidential and construction loans ticked up modestly (10–11%), while multifamily was unchanged. Demand eased for construction and office assets. With nearly two-thirds of CRE loans set to mature in 2025, refinancing pressure is building under higher-for-longer interest rates.

Consumer credit: Card lending continued to tighten (around 10% net tightening), and demand slipped. Auto and jumbo mortgage lending held steady, with auto loans showing a mild rebound. Even so, Moody’s warns that rising charge-off risks could weigh on both auto and card portfolios if the economy softens further.

➥ The bottom line: Banks have backed away from the harshest tightening measures, but with demand deteriorating, credit markets remain stuck in neutral. For CRE borrowers, a leveling in standards offers little relief as refinancing challenges intensify.