A Federal Reserve report released on Monday that addresses changes in the supply of, and demand for, loans to businesses and households over the previous three months – showed that signs of stabilization in the U.S. economy aren’t resulting in an easing in lending terms.
From Bloomberg: Banks are hoarding a record $1.1 trillion of cash even after the Treasury and central bank made emergency capital injections and set up special lending programs to ensure lenders extended credit to households and businesses.
Not a single U.S. bank in the Fed survey reported easing credit terms and conditions on prime residential mortgage loans or loans to large or mid-sized commercial and industrial firms…today’s Fed report said.
In business lending, the share of banks tightening loan terms remained “very elevated” while declining for the second straight survey, the Fed said. For commercial and industrial loans, the share of banks tightening credit standards fell to 40 percent from 65 percent.
Although 40% is still quite elevated, the April survey marks the first time since January ’08 that the proportion of banks reporting such tightening fell below 50%.
For commercial real estate [CRE], about 65 percent of domestic banks raised standards for loans, versus 80 percent in the January survey. It’s the first time since October 2007 that the share of banks tightening on commercial property fell below 70 percent, the Fed said.
On balance, domestic banks have been tightening credit standards on CRE loans for 14 consecutive surveys, and the April survey marks the first time since October 2007 that the net proportion of banks reporting such tightening fell below 70%, the fed said.