Fed: Tighter Credit, Weaker Mortgage Demand Reported

Federal ReserveBanks either continued or increased tight lending standards over the past three months – from household and small business credit cards to commercial and industrial lending –  according to the Federal Reserve’s most recent survey of lending practices.
The April survey found that most banks “kept their lending standards unchanged in the first quarter, but that moderate net fractions of banks further tightened many terms on loans to businesses and households,” said the Fed’s overview of 56 domestic banks and 23 U.S. branches of and agencies of foreign banks.
Adding to the discouraging credit sector outlook is a waning demand for mortgages, compared to the last survey conducted in January.
This time, “a more sizable fraction of banks indicated that demand for prime mortgages weakened over the past three months, and a fairly large net fraction of banks also reported that demand for home equity loans weakened …” the Central Bank said.
Most of the banks that reported a slight easing of some lending policies were large institutions with total assets of more than $20 billion.
Credit card lending tightened, but terms on other consumer loans eased.
“A small net fraction of banks reported having tightened standards for credit cards, and moderate fractions reported having reduced credit limits and increased spreads of interest rates charged on outstanding credit card balances,” the Fed reported.
However, some banks have reported increased willingness to make consumer installments loans more available, the Fed said.
Some larger banks also reported an easing of terms for commercial and industrial loans. But a majority of banks said their standards for business credit card accounts are “currently tighter than the longer-run average level that prevailed before the crisis.”
Here is the Fed’s complete April 2010 Senior Loan Officer Opinion Survey
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