Fed: Refinance Demand Down as Overall Lending 'Weakened a Bit'

Fed: Refinance Demand Down as Lending 'Weakens a Bit'For consumers, the most important takeaway from today’s update from the Federal Reserve is that lending has weakened.
The Beige Book for the September 17-18 Federal Open Market Committee meeting provides a summary of economic and banking conditions from businesses and other contacts outside the Federal Reserve System, which encompasses 12 districts across the nation.
“Lending activity weakened a bit, and several districts reported less-favorable conditions than in the preceding reporting period,” the Beige Book said. The previous update was released in mid-July.
Most districts indicated “no better than modest growth,” the Fed said.
“Demand for mortgage refinance loans declined in the New York, Philadelphia, Cleveland, and Richmond Districts,” the Fed reported. “By contrast, purchase mortgage lending continued to grow moderately in most Districts, although San Francisco noted that applications have dropped a bit in some areas of that District.”
In the Atlanta District, increases in home values generated a surge in second mortgages, and Philadelphia and Cleveland reported modest increases in demand for home equity lines of credit.
Overall loan growth in the Atlanta, Chicago, St. Louis, and San Francisco districts was slower than in the previous reporting period.
Several Districts characterized business lending as largely flat.
It was a mixed picture, however, depending on the region and the impact of higher interest rates. The data was collected on or before Aug. 26.
Chicago reported that recent interest rate increases likely were depressing commercial investment. However, Kansas City reported that expectations for better economic conditions and stronger profit growth had offset any effects of rate increases on business loan demand.
The Beige Book report noted that three quarters of the districts said growth was “moderate,” while four called growth “modest” and Chicago said “activity had improved.”

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