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Banks still stingy on lending

February 17th, 2009 12:58 PM by Lehel Szucs

Banks still stingy on lending

Most institutions made it harder for businesses and consumers to get loans in the last three months despite capital infusions from the government, a Federal Reserve survey shows.
By Tom Petruno
February 3, 2009
Most banks still are tightening the screws on borrowers, despite the government's efforts to ease credit conditions by injecting lenders with capital.

The Federal Reserve's latest survey of bank lending, reported Monday, showed that a majority of banks made it harder to get loans in the last three months -- although in some loan categories the percentage tightening credit was down from the Fed's October survey.

"Around 90% of domestic banks indicated that they had increased spreads of loan rates over their cost of funds" for commercial and industrial loans, the survey found. "Likewise, very large fractions of banks reported having charged higher premiums on riskier loans and having increased the costs of credit lines to firms of all sizes over the survey period."

Commercial real estate lending standards were tightened by 79% of domestic banks, compared with the 87% that reported making loans harder to get in the October survey.

Consumers with good credit may have found it somewhat easier to get a mortgage: The percentage of lenders tightening standards on prime home loans fell to 47% in the latest survey from 69% in the previous survey.

Posted in:General
Posted by Lehel Szucs on February 17th, 2009 12:58 PM



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