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Data & Analysis

Financial Services - November 2010

The weekly Primary Mortgage Market Survey conducted by Freddie Mac showed that the 30-year and 15-year fixed mortgage rates increased slightly for the week ending Nov. 26.

  • The rate for 30-year fixed-rate mortgages increased 1 basis point to 4.40 percent for the week ending Nov. 26. The rate is up slightly from the record low rate of 4.17 percent set the week ending Nov. 12. A year earlier, the rate averaged 4.78 percent.
  • The rate for 15-year fixed-rate mortgages averaged 3.77 percent, up 1 basis point from the previous week. The record low rate of 3.62 percent was set the week of Nov.12. The rate averaged 4.29 percent a year earlier.

In its weekly survey of mortgage bankers, commercial banks, and thrifts, the Mortgage Bankers Association reported an increase in mortgage applications for the week ending Nov. 19.

  • The purchase applications index increased 14.4 percent from a week earlier and is at its highest level since early May.
  • The seasonally adjusted refinance index decreased 1 percent from the previous week and is at its lowest level since June. The refinance share of mortgage activity currently represents 78.6 percent of total application volume.

The Federal Deposit Insurance Corporation press release listed one Sixth Federal Reserve District bank among the three closed by regulators on Nov. 19; the District's total number of closed banks now stands at 48 for 2010.

  • Regulators closed one district bank on Nov. 19: Gulf State Community Bank (Carrabelle, Fla.).
  • One bank in each of Pennsylvania and Wisconsin was also closed, bringing the nationwide total of failed FDIC-insured institutions to 149 so far for the year.
  • Florida leads the nation with 28 bank failures during 2010, followed by Georgia with 18 and Illinois with 16.
  • The number of District failures in 2010 has already surpassed the number of District failures that occurred during 2009, when a total of 42 District banks were closed.
  • The Federal Reserve Bank of St. Louis provides an interactive map of bank failures.

The latest Senior Loan Officer Opinion Survey from the Federal Reserve Board of Governors (covering Q3 2010 activity) indicated that banks eased standards on some categories of loans to both households and businesses.

  • On net, domestic banks reported easing standards on commercial and industrial (C&I) loans to firms of all sizesâ??in particular, reducing the spreads of loan rates over the banks' cost of funds and trimming the costs of credit lines.
  • A more favorable or less uncertain economic outlook and increased competition from other banks and nonbank lenders were cited as important factors behind the recent easing of terms and standards.
  • Only two domestic banks reported tightening standards on C&I loans.
  • The banks that tightened policies attributed their tightening to a reduced tolerance for risk, a less favorable or more uncertain economic outlook, or increased concerns about the effects of legislative changes, supervisory actions, or changes in accounting standards. Some also cited deterioration in their current or expected liquidity or capital positions as an important reason.

Domestic banks reported weaker demand for C&I loans.

  • Banks cited reduced financing needs by customers for inventories and accounts receivable, reduced investment in plants and equipment, and increases in internally generated funds as reasons for the decrease in demand for C&I loans.
  • The number of inquiries regarding new or increased lines of credit continued to rise, signaling that demand might pick up in the future.

On net, domestic banks reported tightening standards on both prime and nontraditional mortgage loans.

  • The tightening of standards on prime mortgage loans marked a reversal from the July survey that indicated a slight net easing. Smaller banks accounted for most of the tightening of standards while larger banks, on net, reported no change in standards for these loans.
  • Large and small banks reported a net tightening of standards on nontraditional mortgage loans; fewer than half of the respondents indicated having made nontraditional mortgage loans during the survey period.

A small net fraction of respondents reported weakening demand for both prime and nontraditional mortgage loans.

Most banks reported no change in their commercial real estate (CRE) loan standards.

  • Similar to the results from the July survey, the net percentage of banks reporting that standards on CRE loans had tightened was small.

On net, domestic banks reported little change in the demand for CRE loans.

  • Larger banks reported stronger demand while smaller banks tended to report weaker demand.


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