Fed: U.S. Banks Ease Lending Standards for Businesses, Consumers

Fed: U.S. Banks Ease Lending Standards for Businesses, ConsumersThe Federal Reserve’s just-released January 2014 survey on lending found that U.S. banks overall reported having eased their lending standards on many types of business and consumer loans.
These banks have also seen increases in loan demand, on average, over the past three months, the Fed reported.
Survey respondents indicated that they had eased standards on credit card loans, auto loans, and other consumer loans.
“On balance, banks eased their lending policies for commercial and industrial (C&I) loans to firms of all sizes and experienced stronger demand for such loans over the past three months,” the survey found.
The Federal Reserve surveys senior loan officers across all of its districts every three months to see if banks are easing or tightening standards for both consumers and commercial interests.
The report’s finding on commercial loans is one of the most upbeat in several quarters.
“Almost all domestic banks that eased their C&I lending policies cited increased competition for such loans as an important reason for having done so,” the Fed said.
Results for consumer lending were more mixed, the survey of loan officers found.
“The survey results indicated that a modest fraction of large banks had eased standards on prime residential real estate loans, but a similar fraction of small banks had tightened standards on such loans,” the central bank said.
A “moderate fraction of banks” reported weaker demand for prime mortgage loans to purchase homes, and a “large net fraction” reported weaker demand for non-traditional mortgage loans.
Meanwhile, demand for home equity lines of credit (HELOCs) was little changed.
“Most banks reported little change in most terms on consumer loans, with the exception of credit card limits and loan rate spreads on auto loans, which modest fractions of banks reported having eased on balance,” The Fed said.
“Modest net fractions” of banks reported increases in demand for all types of consumer loans.

Leave a Reply

Your email address will not be published. Required fields are marked *