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Bank lending overview:
- Who: A survey of bank loan officers was released by the Federal Reserve.
- Why: Standards across all areas of residential household loans have tightened while demand has weakened for all times of residential real estate loans.
- Where: The survey was from the Washington, D.C.-based Federal Reserve.
Residential home lending standards continued to tighten following failures while demand for those loans dropped, according to a Federal Reserve survey of bank loan officers.
There are also higher standards and lower demand for home equity lines of credit, the bank lending survey said. Standards tightened for all types of consumer loans while demand for auto loans has dropped; credit card loans have remained unchanged.
“Regarding banks’ outlook for the second half of 2023, banks reported expecting to further tighten standards on all loan categories,” the report said. “Banks most frequently cited a less favorable or more uncertain economic outlook and expected deterioration in collateral values and the credit quality of loans as reasons for expecting to tighten lending standards further over the remainder of 2023.”
The number of credit card loans granted to those who don’t fit the credit scoring requirements has dropped overall as well, the bank lending survey showed.
Fed chair says banks overall recovered from failures that could be affecting loan tightening
The news comes after the regional bank failures of Silicon Valley Bank and Signature Bank this spring.
Federal Reserve Chairman Jerome Powell said overall, bank conditions including deposit flows and capital have stabilized since the bank failures.
He added bank profits have become more consistent and the sector has shown it is strong and consistent.
“In terms of the actual effect on, if you think of a particular set of banks that were affected because of their size and business model and things like that, they were more affected by the turmoil in March than others,” Powell said. “It’s very hard, as I mentioned, it’s very hard to sort of tease out the effects on this very large economy of ours, from them tightening. They may be tightening a little bit more, probably are, than other banks.”
The Consumer Financial Protection Bureau ordered Wells Fargo Bank to pay $3.7 billion in compensation and penalties for charging illegal fees and interest on auto and mortgage loans.
Have you tried to obtain a bank loan recently? Let us know in the comments.
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6 thoughts onBanks raise lending standards following failures, Federal Reserve report finds
Add me please
Please add me. Going through some of the same scenarios. Sickening. I’m beyond pissed and disgusted with my personal banks.
Wells Fargo coerce a 92 year old lady by going to her home and convincing her to take out a 40 year additional mortgage through modification that was no need to do so knowing she was not behind on payments and only 10 years left .However they lied in order for her to be persuaded .Telling her she would loose her house if modification was not done.
Denied loans repeatedly tho my score was 694 and overnight dropped to 599 for no other reason than I cancelled my auto insurance which I’ve continued to pay since last September when in June I filed bankruptcy and the trustee arbitrarily and unreasonably made me surrender my car tho I was not behind even one car payment nor was I late. Leaving me in limbo as to do I pay car payment or do I pay bankruptcy filing fee until date of discharge
please add me
Please add me.