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Banks easing lending standards, Fed survey shows

The nation's banks are making it generally easier for consumers and industries to get residential mortgages and business and commercial real estate loans, the Federal Reserve said this week.

In a July survey of senior loan officers, the Fed also found that loan demand is picking up broadly since earlier in the year. Banks reported having experienced the strongest demand in a year for prime residential mortgages. The survey includes responses from 75 U.S. banks and 23 U.S. branches and offices of foreign banks.

"The July survey results showed a continued easing of lending standards and terms for many types of loan categories amid a broad-based pickup in loan demand," the Fed said in reporting the survey results.

The Fed's findings suggest that banks' profit margins could come under pressure; that's because most U.S. respondents — nearly 70 percent — said a key reason for easing standards or terms on business loans over the past three months was due to more aggressive competition from other banks or from nonbank lenders.

Although about 70 percent of loan officers surveyed said standards for prime residential mortgage borrowers have remained the same, 24 percent said they have "eased somewhat," according to the 100-page survey results.

Respondents generally indicated little change in standards and terms for other types of loans to households, but a few big banks had eased terms, increased credit limits and reduced the minimum required credit score for credit card loans, the Fed said.

Banks easing lending standards, Fed survey shows 08/05/14 [Last modified: Tuesday, August 5, 2014 6:34pm]
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