Fed survey: Tightening, tightening everywhere
* 83.6% of the lenders surveyed said they were tightening standards on commercial loans to large- and medium-sized borrowers. That was up from 57.6% in the third quarter and the highest level the Fed has EVER found. The survey dates back to 1990.
* Business borrowers who are lucky enough to find a bank willing to make them a loan are paying much more to get their money, too. A whopping 98.2% of those institutions surveyed said they were increasing the “spread” between the rates they charge corporate borrowers and their own cost of funds. That’s up from 80.8% a quarter earlier and the highest ever.
* On the real estate front, there was plenty of bad news to go around. A net 87% of lenders surveyed said they were tightening lending standards on commercial real estate loans. That was up from 80.7% a quarter earlier and ... you guessed it ... the highest ever.
* What about residential mortgages? Every single lender polled – 100% -- said they had tightened standards on subprime loans, up from 85.7% a quarter earlier. The percentage of lenders tightening standards on so-called “nontraditional” mortgages (those made to borrowers with less income documentation, interest only loans, and so on) jumped to 89.7% from 84.4%.
These were the highest readings since the Fed began splitting out the mortgage category by type of loan. The only break was in conventional mortgages, where the net tightening percentage slipped slightly to 69.2% from 74%. That was still the second-highest reading on record (using the "all mortgage" category as a proxy prior to Q2 2007).
* As for consumer credit, there was a slight improvement quarter over quarter. The percentage of lenders tightening standards on credit card loans dipped to 58.8% from 66.6%, while the net tightening measure for other consumer loans slipped to 64.2% from 67.4%. But those are still the second-worst readings on record behind the third quarter of this year (the data in this category goes back to 1996).
* Moreover, more and more banks aren’t willing to make consumer loans at all. Some 47.2% of those surveyed said they were either somewhat or much less willing to make consumer loans, up from 34% a quarter earlier. That was the worst reading on record. About 48.1% of those polled said they were seeing less demand for consumer loans, the worst reading in that category on record as well.