Big banks have been reducing their exposure to CRE, which is still grappling with high vacancy rates.

The CDFI fund supports mission-driven lenders operating in rural, tribal, and otherwise underserved parts of the country. Last year, it awarded over $400 million to those institutions. 

If the economy goes south, it could affect the ability of working people to continue making payments. And that could affect the banks’ bottom lines.

According to the August Beige Book, nearly every district reported a modest rise in demand for loans.

Foreign investors would also pull their money out of the U.S.

Bankers are becoming concerned about some borrowers' ability to repay. As a result, many are taking a harder look at the loans they make.

One issue: Managing the cost of repaying COVID-era loans that they took out to survive in 2020 and 2021.

A report from Bankrate found that lenders rejected nearly half of all loan applications in 2024, and auto loan and mortgage refinance rejections hit record highs.

The New York Federal Reserve found that rejection rates for loan applications are higher than they were in 2023 for credit cards, auto loans, mortgages and refinances.

The Federal Reserve’s easing of interest rates may be one factor that turned the mood around. Another could be the election.