Thanks to “aggressive competition,” banks eased up on tight lending standards during the second quarter of this year, reported the Federal Reserve yesterday. However, these “lighter” terms did not extend to the real estate sector, with banks continuing “to ease lending standards on all major types of loans other than loans secured by real estate,” said the report[1]. Lenders cited “lackluster demand from creditworthy borrowers and uncertainties about the outlook for house prices and the overall economy” as the main reasons for not loosening standards for mortgage lending.
In the commercial sector, banks did not just fail to loosen standards; they tightened them. In fact, 30 percent of U.S. banks reported to the Federal Reserve that their standards for commercial real estate loans are the tightest that they have been since 2005[2]. Banks also cited a lack of consumer interest in borrowing as a major problem in the mortgage lending sector. The report also suggests that in the housing sector, would-be buyers are opting out because they do not want to buy a house in a market where prices are still declining.
Do you think that banks should loosen credit standards so that they can loan more money, or will that just put us right back where we started?
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[1] http://www.bloomberg.com/news/2011-08-15/fed-says-banks-ease-lending-standards-in-face-of-aggressive-competition-.html
[2] http://www.ft.com/intl/cms/s/0/ca19c24a-c779-11e0-9cac-00144feabdc0.html#axzz1VDKc5gh7
Again, banks are being disingenuous. I am a realtor. I know. The reason for ‘lackluster’ enthusiasm by qualified buyers is that the banks are doing everythign they can to disqualify buyers! Business owners in particular find it impossible to purchase a home, even if they can demonstrate that they can afford the payment and that their business is flourishing, they are being denied loans unless they have a 900 credit score and 30 – 50% for a down payment. This is utterly ridiculous. Small Business is the backbone of this country and we need to recognize that. And the reason for uncertainty in the real estate market IS the banks! Their frenzy to foreclose rather than modify mortgages which you so accurately reported on a few days ago is causing he uncertainty they complain of. Once again they create the situation they compalin of. Unfortunately they are holding the entire economy back from recovery and the entire Nation is suffering at the hands of a bunch of incompetent fools! Wake Up AMerica! I hope they don’t just go bankrupt, I hope they go out of business entirely and make way for some ‘fresh blood’ in the banking business!
I AGREE!!!
If you didn’t know better, you’d think the regime actually wanted to destroy the nation’s economy…thank goodness we know better.
The banks are the government, who do you think owns the FED. See President Jacksons remarks as refernece to this situation. Drop out of your bank and join a credit union where as a memeber you are an owner and have a say about how buisienss is down. If you get their income then they will change how they play ball. F
I believe that a litlle loosening would help. Because when there are buyers that have credit score of 700+ and the lending is tight, and the process becomes difficult thru the underwriter, there is a huge problem. However it doesn’t need to be so loose that anyone can be approved which will cause the market to default in their loans due to lack of responsibility to repay the loan by a buyer with a low credit score and no down payment. There are hundreds to thousands of foreclosures due to bad loans. We don’t need to go that route again. Thank you!