By Howard Schneider

WASHINGTON, (Reuters) – Banks eased credit standards in the third quarter, for households, businesses and commercial real estate investors, to help the U.S. weather the current wave of coronavirus pandemic. A Federal Reserve survey released Monday.

Fed Senior Loan Officer Survey reveals evidence that the economy is continuing to grow. Banks “generally reported that banks had relaxed standards for business loans through lowering rates or expanding credit lines or by imposing more restrictive terms.”

Fed reports that banks “cited a better or less uncertain economic outlook”, more competition among lenders, and “an increase tolerance for risk” in the face of general market improvement and improved economic outlook. In particular, the Fed noted that loans were more in demand among large and medium-sized businesses.

Reports also indicated that commercial real estate loans were subject to lower standards and more demand.

The banks generally also relaxed consumer credit card requirements and auto loan standards by increasing credit limits or lowering credit scores.

The Fed found that while credit card demand increased, auto loan demand declined. This could be a sign that either price rises have begun to impact demand or the recent buying surge has peaked.

Banks responded to special questions about the pandemic by stating that demand for credit cards and business loans was still lower than pre-pandemic levels. However, they expect a stronger market in the six months ahead.

The Fed stated that banks had “cited customers who have more favorable income prospects and higher consumer spending requirements given the prevailing terms and interest rates as reasons why they expected stronger demand.”