Fed’s Loan Officer Survey Shows Rising Demand for Mortgages, Slightly Easier Standards

The July Senior Loan Officer Survey from the Federal Reserve details changes in lending standards and loan demand over the last three months.  Demand for prime mortgage loans and non-traditional loans — mostly adjustable rate mortgages — is up during the period; demand for sub-prime was up but very few banks reported in the sub-prime category.  Looking at prime mortgages, 38 of the 67 banks reported showed moderately stronger demand , one bank reported substantially higher demand, five reported moderately weaker and one substantially weaker. Among the large banks included in the total the same proportion reported moderately stronger and moderately weaker demand.  The number for non-traditional loans show six of 32 reporting moderately stronger demand, three reporting mdoerately weakers and two substantially weaker. The pattern among large banks was similar,

Looking at credit standard applied to prime mortgages, 58 of 67 banks reported no change, seven reported standards were eased somewhat and two reported standards were tightened somewhat.  The pattern was the same for large banks included in the total. The proportions among banks making non-traditional loans was similar. However, only four banks reported in the sub-prime category: three saw standards remaining the same and one reported that standards were tightened considerably.

Bottom line for housing is mortgage demand is increasing, lending standards for prime and non-tradtional loans eased a bit and sub-prime seems to be vanishing. 

The survey can be found here

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