Demand for commercial real estate (CRE) loans jumped during 1Q11 to one of the highest readings in over a decade, according to the Federal Reserve's periodic survey of senior loan officers.
However, demand for single-family loans fell during the first quarter for the third consecutive quarter. The Fed survey was sent to 55 U.S. banks in late March with responses due by mid-April.
"About 35% of domestic banks reported having seen increased demand for CRE loans -- the strongest since the mid-1990s," the Fed said.
Loan officers at 18 large banks ($20 billion or more in assets) and four smaller banks reported higher demand for CRE loans, according to the survey, which was released late Monday afternoon.
In the last survey, taken in early January, banks reported a 10% increase in demand for CRE loans — the highest level since 2006.
In the past two surveys, loans officers reported little change in their credit standards for CRE and prime single-family loans.
However, smaller banks continue to tighten their credit standards on "nontraditional" adjustable-rate mortgages with interest-only and limited income verification features.
In terms of prime residential loans, 45% of the banks reported "moderately weaker" demand while 11% of banks reported higher demand.