Even with interest rates rising, banks are continuing to ease lending standards for business loans, according to the Federal Reserve.

The Fed’s January survey of senior loan officers found a moderate net percentage of banks reported that they eased commercial and industrial loan standards for large and middle-market firms over the past three months, while standards remained basically unchanged, on net, for loans to small firms.

For C&I loans to large and middle-market firms, a moderate net percentage of banks reportedly decreased loan rate spreads, increased the maximum size of credit lines, and eased loan covenants.

“Among the domestic respondents that reportedly eased their credit policies on C&I loans over the past three months, more aggressive competition from other bank or non-bank lenders was by far the most emphasized reason for easing,” the Fed said.

“Nearly every bank that reported having eased standards attributed this change, in part, to more aggressive competition, with a majority of respondents indicating that the reason was ‘very important,'” the survey added. “No other reason queried was cited as important by a majority of banks, nor was any other reason cited as ‘very important’ by more than a couple of banks.”

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Standards were eased even though the Fed raised interest rates three times in 2017 and its benchmark lending rate is currently in a range of 1.25% to 1.50%.

As Reuters reports, “Financial conditions generally tighten as the central bank lifts borrowing costs but so far they have remained loose. It is part of the reason why many Fed policymakers remain confident in continuing to gradually raise interest rates without stalling economic growth.”

On the commercial real estate side, Moderate net fractions of banks reported tightening their standards for loans secured by multifamily residential properties and loans for construction and land development purposes, while banks reportedly left standards for loans secured by nonfarm nonresidential properties basically unchanged on net.

Banks also reported that standards for residential mortgage lending remained basically unchanged, with the exception of mortgages eligible to be securitized by government sponsored enterprises, for which a moderate net share reported easing standards.

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