Financial Services - May 2008
District contacts reported generally tighter lending and underwriting conditions for all types of loans, including closer scrutiny of income, lower loan-to-value ratios, and larger down payments. Deposit growth at Sixth District banks remains constrained through the first quarter of 2008. Increased foreclosure activity is being noted in most parts of the District.
Data from the Mortgage Bankers Association show that the percentage of seriously delinquent loans in the subprime mortgage segment increased significantly in all states during the fourth quarter of 2007 compared to the third quarter. As the fourth quarter map indicates, delinquency rates in this segment were greater than 10 percent in many parts of the country and more than 20 percent in Ohio and Michigan.
The percentage of seriously delinquent loans in the subprime mortgage segment was higher than 10 percent in all the District states during the fourth quarter of 2007: 11.9 percent (up from 9.9 percent in the third quarter) in Alabama; 17.5 percent (up from 12.2 percent) in Florida; 13.6 percent (up from 11.9 percent) in Georgia; 13.2 percent (up from 12.1 percent) in Louisiana; 16.4 percent (up from 13.8 percent) in Mississippi; and 12.2 percent (up from 9.9 percent) in Tennessee. The increase in Florida was the largest among District states—a 5 percentage point increase over the third quarter and a more than threefold increase from the fourth quarter of 2006, when the percentage was 5.2 percent.
Data for banks headquartered in the Sixth District indicate that loans secured by real estate increased in the first quarter of 2008 compared to the first quarter of 2007. Credit card debt extended by District banks increased in the first quarter of 2008 compared to a year earlier and has been growing since the first quarter of 2007.