. WASHINGTON — More banks are tightening lending standards on home mortgages and other consumer and business loans as a deepening...
WASHINGTON — More banks are tightening lending standards on home mortgages and other consumer and business loans as a deepening credit crisis exerts a heavier toll on the economy.
The Federal Reserve said today that the percentage of banks reporting tighter lending standards rose across various loan types in its July survey. In April, the central bank had found that the percentage of banks reporting tighter lending standards was already near historic highs.
The new survey, conducted early last month, found that about 75 percent of the banks surveyed indicated they had tightened their lending standards for prime mortgages. That was up from about 60 percent in the previous survey.
Most Read Business Stories
- 1 house, 45 offers: Homebuyers in Western Washington hard-pressed as supply remains scarce
- 55,000 in Washington state may have to pay back thousands in jobless benefits
- Boeing made an entire fake neighborhood to hide its bombers from potential WWII airstrikes
- Seattle artists worry potential sale of historic INS building could spell the end for their studios
- Frontier cancels flight, citing maskless passengers
The Fed’s July survey covered 50 banks that hold about 80 percent of the residential mortgages on the books of all commercial banks.
Out of this group of 50 banks, 32 said they were still originating so-called nontraditional home mortgages. Among these 32 banks, about 85 percent said they had tightened their lending standards, up from 75 percent who said they were tightening lending standards for nontraditional mortgages in the April survey.
The Fed defines nontraditional mortgages as interest-only loans and “Alt-A” mortgages that required limited verification of income.
The survey found that many banks had reported tightening their lending standards and terms on all major categories of consumer and business loans over the past three months.
About 65 percent of domestic banks — more than double the roughly 30 percent in the April survey — reported that they had tightened lending standards on credit-card loans.