Few banks tighten standards for prime loans

A “relatively small” number of U.S. lenders tightened their standards for prime mortgages in February, March and April, though a “considerable” number tightened their standards for subprime and nontraditional loans, the Federal Reserve found in a survey of senior loan officers.
More than half the lenders who responded told the Fed they had tightened standards on subprime loans to borrowers with poor credit or little credit history, and 45 percent reported they had tightened standards for Alt-A and other nontraditional loans, according to Bloomberg News, but only 15 percent reported “somewhat tighter” standards for prime mortgages.
“This is one indicator that the subprime problem is contained,” Torsten Slok, an economist in New York for Deutsche Bank AG, told Bloomberg. “From an economic standpoint, the real danger was that this would spread from subprime.” The Fed’s previous quarterly report, released in February, had found more lenders tightening their standards than in any quarter since the early 1990s.
The Fed’s April survey drew responses from 53 U.S. banks and the U.S. operations of 20 foreign banks. Demand for home loans was lower than in the previous quarter at about 20 percent of the lenders who responded, the survey found, while about 25 percent of lenders saw a decrease in demand for consumer loans.

No posts to display