Lenders Tighten Underwriting as Geopolitical and Recession Risks Rise
Event summary
- Q3 2026 J.S. Held Lending Climate survey shows near-term US economic performance grade fell to 1.96 from 2.26, long-term grade to 2.04 from 2.33.
- Geopolitical risk/war (39.9%) and US recession (30.4%) were top near-term concerns among lenders.
- 56% of lenders plan to maintain loan structures while borrowers continue investing in new products, capital, markets, and hiring.
- Financial Services topped volatility expectations, followed by Energy and Power, Consumer Products and Services, Agriculture, and Real Estate.
The big picture
The Q3 2026 survey highlights a growing divide between lenders' cautious outlook and borrowers' growth-oriented strategies. Geopolitical instability and recession fears are driving more selective underwriting, particularly for larger loans, while borrowers continue to invest in organic growth. This dynamic suggests a market where disciplined risk assessment is becoming as critical as growth potential in lending decisions.
What we're watching
- Risk Management
- How lenders' heightened focus on risk management will affect borrowing costs and availability for mid-sized companies.
- Economic Volatility
- Whether the disconnect between lender caution and borrower expansion plans will persist or narrow in Q4 2026.
- Sector-Specific Risks
- The pace at which volatility expectations broaden beyond Financial Services into other high-risk sectors like Energy and Real Estate.
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