DJ Fed:Standards Tighten For Prime, Nontraditional, Subprime Mtges
Last update: 2/4/2008 2:00:40 PM
WASHINGTON (Dow Jones)--U.S. banks have tightened their standards on loans for prime, non-traditional and subprime mortgages, a survey said Monday.
In its quarterly survey of senior loan officers, the U.S. Federal Reserve also reported demand for bank loans weakened for both businesses and households.
Banks got the survey in early January and their responses were due Jan. 17. The survey was based on responses from 56 domestic banks and 23 foreign banking institutions.
"In the January survey, significant numbers of domestic respondents reported that they had tightened their lending standards on prime, nontraditional and subprime residential mortgages over the past three months," the Fed said.
About 55% of domestic respondents indicated they were tightening lending standards, up from 40% in October.
Of 39 banks that originated non-traditional residential mortgage loans, about 85% reported a tightening of their lending standards on such loans over the past three months, up from 60% in October.
Five of the seven banks that originated subprime mortgage loans noted they had tightened their lending standards on such loans, similar to the proportion in October.
About 60% indicated demand for prime residential mortgages had weakened over the past three months and 70% noted weaker demand for non-traditional and subprime mortgage loans.
One-third of domestic institutions reported having tightened their lending standards on commercial and industrial loans to small, large and middle-market firms over the past three months. That is a larger net fraction than in October.
Large domestic banks reported demand for C&I loans from large and middle-market firms was nearly unchanged over the past three months. About 35% of small domestic banks reported weaker demand.
About 80% of domestic banks reported tightening their lending standards on commercial real estate loans over the past three months, a notable increase from October, the Fed said. It was the highest net fraction since the question was introduced into the survey in 1990.
About 45% of domestic and foreign banks reported weaker demand for CRE loans.
Banks were asked about their expectations for delinquencies and charge-offs on loans to businesses and households in 2008. "On balance, the responses indicate that large majorities of domestic and foreign banks expect a deterioration in loan quality in 2008," the Fed said.
-By Jeff Bater, Dow Jones Newswires; 202 862 9249; jeff.bater@dowjones.com
(END) Dow Jones Newswires
February 04, 2008 14:00 ET (19:00 GMT) |
