Financial Services - April 2009Data and Analysis
District lending conditions remained tight for both consumers and small businesses during the first quarter of 2009. Contacts continued to cite a lack of commercial loan demand, uncertainty of real estate values, and continued heightened credit analysis as factors restraining the current lending market. Lower mortgage rates have increased the number of mortgage applications for both purchases and refinances.
Freddie Mac Primary Mortgage Market Survey
The 30-year fixed mortgage rate continued to trend downward, falling 2 basis points to 4.80 percent for the week ending April 24. This rate is very close to the series’ historical low of 4.78 percent, which was set the week ending April 3. The data series for the 30-year fixed mortgage rate began in January 1972.
Senior Loan Officer Opinion Survey
The Federal Reserve Board’s January 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and the demand for, loans to businesses and households during 2008’s fourth quarter. About 65 percent of domestic respondents reported having tightened lending standards on commercial and industrial (C&I) loans to large and midsize firms during the last three months of 2008; about 70 percent of domestic respondents tightened standards on C&I loans to small firms. Both figures are down slightly from the reported tightening in October 2008 but are still above the earlier record peaks reported in 1990 and 2001.
Respondents also reported that demand for loans from businesses continued to weaken over the survey period because of decreases in customers’ financing needs. The few respondents who saw an increase in loan demand over the fourth quarter of 2008 indicated that business borrowing had shifted to their banks from other bank or nonbank sources as those other sources became less attractive.