Email
Print Friendly
A A A

Banking

Lending Conditions Ease Slightly, Says Fed Survey

consumer lending Banks reported easing credit standards and terms on nearly all types of business and consumer loans in recent months, according to a Federal Reserve survey. The quarterly Senior Loan Officer Opinion Survey covered 55 domestic banks and 22 U.S. branches of foreign banks.

Increased competition drove banks to ease lending standards and terms on commercial and industrial (C&I) loans. Lending conditions improved especially for large and midmarket firms, or those with annual sales of $50 million or more. A modest percentage of banks also reported stronger demand for C&I loans as businesses shifted from other funding sources, said the report.

Real estate lending remains tight
In contrast, banks reported little change to lending standards for loans secured by real estate. In response to a special survey question, banks indicated that "standards for all types of CRE [commercial real estate] lending remain tight relative to the range that has prevailed since 2005." Meanwhile, roughly one-third of banks reported stronger demand for such loans. Household demand for prime mortgages was little changed, while a small net fraction of banks reported weaker demand for nontraditional mortgages.

When asked about their expectations for residential mortgage originations in the second half of the year, about 75 percent of banks said they expect the pace of originations to remain at about the same level, largely the result of lower demand among creditworthy borrowers and weaker forecasts for the economy and house prices.

Consumer demand loosens up
Consumer lending was slightly easier to come by in recent months. Roughly one-third of respondents said they were "somewhat more willing" to make consumer installment loans. More banks reported easing standards for auto loans than for credit card and other consumer loans, the report said. On the demand side, a moderate portion of banks reported stronger demand for auto loans, in contrast with demand for credit card and other consumer loans, which was largely unchanged.

August 30, 2011

 

Related Links

Related Links on Other Sites