Banks are increasing their standards for loans to businesses and households, according to the Fed's latest Senior Loan Officer Opinion Survey on Bank Lending Practices.
The Fed reported that banks tightened standards throughout all residential property (RRE) loan categories and in auto loans, charge card loans along with other consumer loans in Q2 on net.
\”Over the 2nd quarter, major net shares of banks tightened lending standards on all types of consumer loans. Major net fractions of banks also tightened important terms on charge card loans, including credit limits and minimum credit scores required,\” the Fed noted.
Those who replied towards the July poll noted on balance that they made their standards and terms on industrial and commercial (C&I) loans more restrictive to companies. Banks also increased standards and noted less formidable demand through the three major areas of real estate (CRE) loans.
\”Major net shares of banks that reported reasons for tightening lending standards or terms cited a less favorable or more uncertain economic outlook, worsening of industry-specific problems, and reduced tolerance for risk as vital reasons for doing this,\” The Fed said.
As of now, banks on balance noted that their standards for issuing loans throughout all categories are in the tighter area of the spectrum ranging from 2005 to the present time.
The April Senior Loan Officer Opinion Survey released in early Could also noted that banks domestically had increased standards for loans to the people and companies.
As previously reported, it's increasingly difficult for American consumers to acquire loans. One large reason behind the popularity is that banking institutions now can't locate fairly easily out which borrowers are creditworthy.
American Bankers Association Senior Economist Rob Strand previously told The Wall Street Journal, \”Banks are looking cautiously at their underwriting models to ascertain if they should be adjusted to factor in latent risk.\”
