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Senior Loan Officers Report Little Change in Standards as Demand Rises
Small numbers of domestic banks responded to the Federal
Reserve's January survey of senior loan officers with
indications that they have eased their credit standards across major loan
categories over the last three months.
Domestic banks reported that demand for business loans, prime
residential mortgages and auto loans had increased while demand for other types
of loans was essentially unchanged.
U.S. branches and agencies of foreign reported little change in their
lending standards but a net increase in demand.
banks, almost evenly divided between large banks (those with total domestic
assets of $20 billion or more) and other banks responded to the survey question
about prime mortgages. The majority, 92
percent of large banks and 88 percent of other banks, reported that their
standards for writing a prime residential loan were virtually unchanged since
the last survey. Only one large bank
reported lending had tightened "somewhat;" four banks or 6 percent
said their standards for prime loans had eased to some degree.
Demand for these
prime loans for home purchase was reported as about the same by 61.5 percent of
respondents - 20 large and 20 other banks.
Three banks (4.6 percent) reported moderately weaker demand and 19 banks
(29.2 percent) said demand was moderately stronger. Three banks said that demand for prime loans
was substantially stronger.
All but one of
thirty-four banks that responded to a question about their standards for
nontraditional mortgages said that those standards were essentially
unchanged. The remaining bank said its
standards had tightened somewhat.
The demand for
nontraditional residential mortgages was unchanged at 25 banks or 71.4
percent. The remaining ten (one more
bank responded to the demand question than to the one on standards) were divided
equally between those reporting moderately weaker and moderately stronger
Only five banks
said they had done any subprime lending and four reported standards that were
basically unchanged while one said its standards had tightened somewhat. All five said that demand for subprime
mortgages had stayed about the same.
responded to questions about revolving home equity lines of credit. Fifty-nine or 89.4 percent reported their
lending standards were basically unchanged while three reported somewhat
tighter standards and four somewhat eased standards. Demand was moderately stronger in the eyes of
seven banks or 10.6 percent and moderately weaker according to 13 or 19.7
percent. Demand was unchanged for 45 of
the banks or 68.2 percent.
The January survey contained
a set of special questions on respondents' expectations for loan
quality in 2013, questions that have been repeated
annually since 2006. Overall, large fractions
of domestic banks, on net, expected improvements in delinquency and
during 2013 for most loan categories included in the
survey, assuming that economic
activity progresses in line
with consensus forecasts. Moreover,
loan categories were about the same
as the corresponding net fractions from a year ago.
About 50 percent of domestic banks expect the
delinquency and charge-off rates
on prime and nontraditional residential real estate loans to improve
in 2013, on net, about the same fractions reported in
last year's survey. Expectations for improvements this year in the quality of HELOCs
roughly the same
as last year, with
about one-third of the
respondents anticipating an improvement in the quality of
Here's a link to the full report.
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