Magazine article American Banker

Consumer Loan Demand on Rise, Fed Report Says

Magazine article American Banker

Consumer Loan Demand on Rise, Fed Report Says

Article excerpt

Byline: John Heltman

WASHINGTON -- Banks are seeing stronger consumer demand for credit for a range of products, including residential mortgages, auto loans and credit cards, according to a Federal Reserve Board survey of senior loan officers released Monday.

The Senior Loan Officer Opinion Survey -- a quarterly survey of senior banks loan officers aimed at gauging market lending standards and demand -- noted that substantial majorities of officers surveyed said that, while commercial demand remains flat or moderately improved, consumer demand has picked up in recent months.

"Regarding loans to households, banks reported having eased lending standards for a number of categories of residential mortgage loans over the past three months on net," the report said. "On the demand side, moderate to large net fractions of banks reported stronger demand across most categories of home-purchase loans. Similarly, respondents experienced stronger demand for auto and credit card loans on net."

Banks reported that demand for a wide range of residential mortgages was moderately or substantially stronger from the last survey. A substantial minority of respondents -- 43.5% -- reported moderately stronger demand for government-sponsored enterprise-eligible mortgages, while 39% reported moderately stronger demand for government residential mortgages and 26% reported moderate increases in jumbo Qualified Mortgages. Only 24% reported moderately improved demand for QM non-jumbo, non-GSE-eligible loans.

Of those loan officers surveyed, 40% saw a moderate increase in demand for subprime mortgages, though "the vast majority of banks continued to report that they do not extend home-purchase loans to subprime borrowers," the survey said.

Respondents similarly said that consumer demand for other products had inched up, with 23% of loan officers saying that auto loan demand was moderately stronger and 15% saying that non-credit card consumer loan demand had increased moderately. …

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