New Federal Reserve data reveals that consumers are demanding more loans and enjoying an easier approval process from banks, despite rising interest rates. In the Fed quarterly survey of bank loan officers, banks say that are more willing to make loans to consumers as demand became "moderately stronger" in the past three months. The survey covers 56 domestic and 17 foreign banks. Four banks said that they were "somewhat more willing" to make consumer loans in the past quarter. Five banks said that they had eased credit standards for consumer loans, not including credit card accounts. Demand had increased for consumer loans, with 7.5% of the respondents reporting higher demand. The increased demand came despite the tightening of interest rates by the Fed. The central bank paused its campaign of increases earlier in the month, pointing to inflation pressures that moderate over time. But Fed Chairman Ben Bernanke says that some inflation risks remain and that data will be closely watched for signs of inflation growth. Approval standards for commercial and industrial loans reportedly eased, according to the Fed. Fourteen percent of the surveyed banks said they have loosened terms for business loans. As the housing market continues to cool, banks are somewhat easing credit standards for consumer mortgage loans. Seven of the responding banks reported that they have "eased somewhat" in the terms placed on residential mortgages. |
