Fed says banks eased lending standards in the last three months

WASHINGTON Mon Feb 3, 2014 2:03pm EST

WASHINGTON (Reuters) - Banks eased lending standards for U.S. commercial loans in the last three months as demand increased, the Federal Reserve said on Monday, but banks were as likely to have tightened mortgage lending standards as they were to have loosened them.

"Domestic banks, on balance, reported having eased their lending standards on many types of business and consumer loans and having experienced increases in loan demand, on average, over the past three months," the Fed said in its January quarterly senior loan officers survey.

"The survey results indicated that a modest fraction of large banks had eased standards on prime residential real estate loans, but a similar fraction of small banks had tightened standards on such loans," it said.

A moderate fraction of banks reported a drop in demand for prime mortgage loans, and a bigger number reported a decline in demand for nontraditional mortgage loans, the survey said.

The poll covered 75 domestic banks, as well as 21 U.S. branches of foreign firms.

The U.S. central bank's survey also asked about how banks had responded to the Fed's supervisory guidance on leveraged lending, issued on March 21, 2013.

A number of large banks said they had tightened standards on such loans, and that some leveraged loans had been significantly changed by the guidance, but that most borrowers would be able to find other sources of funding.

(Washington newsroom)

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