Banks eased their standards for commercial real estate loans in the second quarter of 2026, a shift from the largely unchanged standards reported three months earlier, according to the Federal Reserve’s July 2026 Senior Loan Officer Opinion Survey released Monday. Demand for those loans, however, stayed mostly flat, suggesting borrowers have yet to fully respond to looser underwriting.
The quarterly survey, known as the SLOOS, is one of the Fed’s most closely watched gauges of credit conditions because it draws directly from bank loan officers rather than aggregated balance-sheet data. The July edition covers responses from 56 domestic banks and 18 U.S. branches and agencies of foreign banks, surveyed between June 17 and July 2, 2026, about conditions over the second quarter.
Standards loosen across most CRE categories
According to the survey, “moderate and modest net shares of banks reported having eased standards for loans secured by nonfarm nonresidential (NFNR) properties and multifamily properties, respectively, while standards for construction and land development (CLD) loans remained basically unchanged.” The Fed’s “net share” terminology reflects the difference between banks reporting tighter standards and those reporting easier ones.
The report notes that large banks β those with $100 billion or more in domestic assets β eased standards across all three commercial real estate loan types, while smaller banks left standards for multifamily and construction loans basically unchanged. Foreign banks moved in the opposite direction: a moderate net share reported tightening CRE standards during the quarter.
That’s a change from the prior quarter. In the April 2026 survey, which covered the first quarter, banks reported having left CRE standards “basically unchanged” on net, with responses mixed by bank size β large banks reported easing standards even then, while smaller banks reported tightening standards for construction and multifamily loans. The July results show that split narrowing, with easing becoming more broad-based.
Demand holds mostly steady, split by bank size
Loan demand didn’t move as much as standards did. The Fed reported “a moderate net share of banks reported weaker demand for CLD loans, while demand remained basically unchanged for NFNR and multifamily loans.” Demand patterns diverged by bank size: large banks reported stronger demand for nonfarm nonresidential and multifamily loans, while other banks reported weaker demand for the same categories. A moderate net share of foreign banks reported stronger CRE demand.
Standards still tight by historical measures β but less so than a year ago
The July survey also included special questions asking banks where current standards sit relative to the range they’ve maintained since 2005. A significant net share of banks said standards for construction and land development loans remain at the tighter end of that historical range, while moderate net shares said the same for nonfarm nonresidential and multifamily standards.
Even so, the Fed noted those shares are smaller than they were in the July 2025 survey β meaning banks, on balance, describe today’s CRE underwriting as less restrictive than it was a year ago, even though it remains tighter than the long-run average. The survey also asked banks about standards on loans to non-depository financial institutions, including mortgage and business credit intermediaries and private equity funds; banks described those standards as being at the tighter end of the range that has prevailed since 2011.
What it means
The verified fact: bank loan officers themselves, not analysts inferring from balance-sheet growth, are reporting looser underwriting for commercial real estate as a category, with the loosening most pronounced at the largest banks. That’s a notable data point for a sector that has spent nearly three years working through elevated distress, particularly in office loans β CMBS distress hit a 2026 high of 10.91% in July, driven largely by office-loan troubles, even as the broader lending backdrop the Fed describes has been improving.
The SLOOS doesn’t say why banks eased CRE standards this quarter β unlike the commercial and industrial loan section, where the Fed listed lenders’ cited reasons, no comparable explanation was published for CRE loans in this release. RealtyWire’s interpretation, consistent with the earlier rebound in big-bank CRE lending volumes reported for the second quarter, is that looser standards and rising loan balances at major banks reflect the same underlying trend: large lenders re-engaging with commercial real estate after a multiyear pullback.
What to watch: whether easier standards translate into actual origination growth when banks report third-quarter earnings, and whether the next SLOOS, due in October, shows demand catching up to the looser underwriting standards banks say they’re already offering.
