WASHINGTON (5/6/14)--In the quarterly Senior Loan Officer Opinion Survey, released Monday for the Fed's second quarter, banks reported looser business lending standards, while standards tightened for mortgage lending (Economy.com April 5).
A net 13.9% of banks said they'd eased commercial and industrial (C&I) lending to large and medium-sized businesses during the second quarter, though 83.3% reported their standards were unchanged.
Banks also reported stronger demand for C&I loans, with 23.6% of banks, on net, citing more demand from large- and medium-size businesses.
But lending standards on mortgages have deteriorated over the past few months, according to Moody's.
While more stringent standards for subprime borrowers swelled to 42.9% from 20% in the second quarter, the percentage of banks that reported tougher standards on prime mortgages remained at 1.4%.
A net -25.7% of banks reported stronger demand for prime residential mortgages and a net -14.3% reported higher demand for subprime mortgages.
"Banks indicated that demand across all residential mortgage lending segments was weaker on net," wrote Andrew Davis, analyst for Moody's on Economy.com. "Additionally, respondents noted tighter lending standards on net for prime, nontraditional and subprime borrowers."
Analysts added, however, that strengthening demand for C&I loans is encouraging, and that "business activity is warming along with the weather, which is accelerating the job market improvement."
Further, banks on net eased standards on consumer credit and auto loans. Tighter lending standards reported by banks for credit cards were down to -9.3% on net, from -7% in the first quarter.
For auto loans, 0% of banks reported more stringent lending standards.