tighten belts
The Federal Reserve announced Monday that most banks expect their lending to remain pinched through the second half of the year. The only exception being mortgage standards; which has already been loosening in recent days.
In this latest survey of loan officers by the Fed, about 20% of banks tightened their lending standard on prime mortgages in the April June quarter. This is down from 50% in their previous survey.
Approximately, 35% of banks tightened their credit card lending practices. This is down from almost 60 percent in the first quarter.
The demand for prime mortgages is up, showing its first increase in the January-March quarter. The Fed began tracking those loans separately in April 2007.
The rise in mortgage demand arrived as rates rose last week. 30-year home loans remained above 5%. This was after they reached a record low earlier this year.
Most of the banks surveyed expect their standards for all loans to remain tighter than average levels over the past decade through at the second half of 2010. For businesses and families with damaged credit, that is expected to continue into indefinite future.
