Monday, May 5, 2014

Banks Continue Trend of Easing Loan Standards

Banks loosened lending standards slightly amid improving loan demand over the past three months in certain sectors, according to the Federal Reserve’s Senior Loan Officer Survey released today. The report, which covers the past three months, indicated that demand for loans generally improved for C&I and CRE loans. The report found mixed changes in lending standards to households.

A net 11.1% of respondents reported seeing looser standards on commercial and industrial (C&I) lending to large and medium sized borrowers. A net 13.9% of banks reported stronger loan demand for large and medium sized businesses. A net 7.0% of banks offering small business loans loosened standards, while 8.5% reported weaker demand for those same loans.

For households, the report found that credit card and auto loans saw looser standards, while the standards tightened for nontraditional closed-end mortgages. There was little change to lending standards on prime real estate loans and equity lines of credit.

Read the report.

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