Banks have yet to loosen their tight grip on credit. The Federal Reserve's
latest survey of senior loan officersfound that most banks maintained stringent lending standards in the first
quarter, while some tightened lending terms further. A total of 56 U.S. banks responded to the Fed survey. Thirty-one were
classified as large banks, and 25 were labeled as "other banks." With regard to loans secured by residential real estate, most banks - 79.2
percent - reported essentially no change in their standards on prime
mortgages over the past three months. Four large banks and one other
reported that their criteria for approving applications from prime
candidates "eased somewhat," while three banks in each category said they
had tightened standards. Fewer than three banks reported that they were still originating subprime
residential mortgages, and 33 said they no longer originated nontraditional
mortgages, defined by the Fed as adjustable rate mortgages with multiple
payment options, interest-only mortgages, and Alt-A products. The April survey results showed the first easing of standards on home equity
lines of credit since the question was first asked in January 2008 - 12.7
percent of all banks surveyed said they had lowered criteria for these
secondary liens "somewhat." Eighty percent reported no change in home equity
credit standards, and 7.3 percent reported "somewhat tighter" standards. Compared with the January survey, a more sizable fraction of banks indicated
that demand for prime mortgages weakened over the past three months and a
fairly large percentage of banks also reported that demand for home equity
loans declined over the survey period.Turning to commercial real estate (CRE) loans, a significant number of
domestic banks continued to tighten their standards. Only one large bank
said it had eased up on credit standards for approving CRE loans. As in the previous survey, U.S. banks reported weaker demand for commercial
property loans. However, in the latest survey, the net fraction of banks
reporting weaker demand moved below 10 percent for the first time since the
financial crisis began. In response to a specially-crafted supplemental question regarding CRE loan
extensions, a large percentage of lenders reported having increased their
use of extensions for commercial property loans over the previous six
months. Only two banks said they had reduced their use of extensions. The
Fed survey defined a CRE loan extension as "a modification of a loan at or
near the end of the original term that extends the term of the loan, as
opposed to a newly underwritten loan used to refinance a maturing loan."
latest survey of senior loan officersfound that most banks maintained stringent lending standards in the first
quarter, while some tightened lending terms further. A total of 56 U.S. banks responded to the Fed survey. Thirty-one were
classified as large banks, and 25 were labeled as "other banks." With regard to loans secured by residential real estate, most banks - 79.2
percent - reported essentially no change in their standards on prime
mortgages over the past three months. Four large banks and one other
reported that their criteria for approving applications from prime
candidates "eased somewhat," while three banks in each category said they
had tightened standards. Fewer than three banks reported that they were still originating subprime
residential mortgages, and 33 said they no longer originated nontraditional
mortgages, defined by the Fed as adjustable rate mortgages with multiple
payment options, interest-only mortgages, and Alt-A products. The April survey results showed the first easing of standards on home equity
lines of credit since the question was first asked in January 2008 - 12.7
percent of all banks surveyed said they had lowered criteria for these
secondary liens "somewhat." Eighty percent reported no change in home equity
credit standards, and 7.3 percent reported "somewhat tighter" standards. Compared with the January survey, a more sizable fraction of banks indicated
that demand for prime mortgages weakened over the past three months and a
fairly large percentage of banks also reported that demand for home equity
loans declined over the survey period.Turning to commercial real estate (CRE) loans, a significant number of
domestic banks continued to tighten their standards. Only one large bank
said it had eased up on credit standards for approving CRE loans. As in the previous survey, U.S. banks reported weaker demand for commercial
property loans. However, in the latest survey, the net fraction of banks
reporting weaker demand moved below 10 percent for the first time since the
financial crisis began. In response to a specially-crafted supplemental question regarding CRE loan
extensions, a large percentage of lenders reported having increased their
use of extensions for commercial property loans over the previous six
months. Only two banks said they had reduced their use of extensions. The
Fed survey defined a CRE loan extension as "a modification of a loan at or
near the end of the original term that extends the term of the loan, as
opposed to a newly underwritten loan used to refinance a maturing loan."
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