Although banks have eased up on increasing restrictions for many types of lending, mortgage guidelines continued to tighten. While fewer banks made fewer changes to restrict the issuance of home-secured credit lines, borrowers showed less interest in such products.
Banks continued to tighten standards on residential loans during the past three months, according to the January 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices released today by the Federal Reserve Board. Most of the tightening was with nontraditional mortgages, though a small fraction also increased restrictions on prime mortgages.
The survey was based on responses from 55 domestic banks and 23 U.S. branches and agencies of foreign banks.
The Fed noted that a moderate number of respondents have seen residential demand decline.
Few of the banks indicated that they had increased guidelines for their home-equity line-of-credit lending. But HELOC demand has tumbled.
A “substantial share” of domestic banks indicated that they had tightened standards on commercial real estate loans, while “large net fractions” said they had tightened debt-service coverage ratios, loan-to-value ratios and the spread between loan rates and banks’ cost of funds. A “moderate” proportion noted demand had dropped off.