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Lending Standards Ease, Demand Up

Results released from bank survey


Aug. 6, 2013

By Mortgage Daily staff


A quarterly survey of banks indicates that as lending standards on commercial and residential mortgages have loosened, demand has grown stronger.

On prime residential loans, lending standards were eased by 10 percent of respondents, though there were no changes at 87 percent.

It was similar for nontraditional mortgages, which saw eased standards at 9 percent of banks and no changes at 88 percent.

Standards on home-equity lines-of-credit were unchanged at 93 percent of participants.

The findings were discussed in the July 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board.

A total of 73 domestic banks and 22 U.S. branches and agencies of foreign banks participated in the survey.

Demand for prime residential loans strengthened at 58 percent of banks, while 9 percent cited weaker demand.

Demand for nontraditional mortgages was stronger at 19 percent of banks but weaker at 16 percent of financial institutions.

A quarter of the respondents said HELOC demand was moderately stronger, while just 12 percent pointed to moderate weakness.

Lending standards on CRE loans were eased by 22 percent of banks during the latest period, and 3 percent indicated tightening.

Over the past year, standards have eased for each of three CRE loan categories: construction-and-land-development loans, nonfarm residential property loans and multifamily loans.

While multifamily lending standards were unchanged at 58 percent of survey participants, they eased at 38 percent of banks. Just 3 percent noted tightening.

C&D loan standards were basically unchanged at more than three-quarters of banks. But they eased somewhat at 18 percent of banks and were somewhat tighter at 6 percent.

During the latest three-month period, demand for all three types of CRE loans has risen at around half of the banks. Just 1 percent reported weaker demand.

Moderately stronger multifamily demand was reported by 46 percent of banks, and another 10 percent indicated "substantially stronger" demand.

Demand for C&D loans was stronger at half of the banks, and only 8 percent indicated lower demand.

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