Major banks made it much tougher for all types of customers to get loans over the past three months, according to the Federal Reserve's quarterly survey of bank lending officers.
This summer's credit squeeze prompted an unprecedented tightening in lending standards at major banks. As credit standards toughened, demand for loans also fell, the Fed reported Nov. 5, providing some fresh details on the fallout from the credit crunch.
Residential mortgages were harder to get than at any time in the 17-year history of the Fed's survey of banks' senior loan officers, the Fed said. The survey covers 52 domestic banks and 22 foreign banks, which together account for a majority of bank lending in the country.
Credit standards tightened for borrowers with the best credit, with 41% of banks requiring prime borrowers to jump over a higher bar before receiving mortgages. That's the biggest increase in tightening standards ever recorded. In the July survey, just 15% of banks reported higher standards for prime borrowers.
Even more banks were clamping down on borrowers trying to get nontraditional or subprime loans. For nontraditional loans (often called alt-A), 60% of banks raised their standards, and 55% of the banks that offer subprime loans raised the bar for such mortgages. The vast majority of banks don't offer subprime loans.
Interesting facts via MSN.com I thought I would share with my activerain community
Anthony Fico
"still writing loans in all 50 states"
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