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VOL. 123 | NO. 25 | Wednesday, February 06, 2008

Fed: Standards Tighten for Mortgages Including Subprimes

AP

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WASHINGTON (Dow Jones/AP) - U.S. banks have tightened their standards on loans for prime, non-traditional and subprime mortgages, according to a survey released this week.

In its quarterly survey of senior loan officers, the U.S. Federal Reserve also reported demand for bank loans weakened for both businesses and households.

Banks got the survey in early January and their responses were due Jan. 17. The survey was based on responses from 56 domestic banks and 23 foreign banking institutions.

"In the January survey, significant numbers of domestic respondents reported that they had tightened their lending standards on prime, nontraditional and subprime residential mortgages over the past three months," the Fed said.

About 55 percent of domestic respondents indicated they were tightening lending standards, up from 40 percent in October.

Of 39 banks that originated non-traditional residential mortgage loans, about 85 percent reported a tightening of their lending standards on such loans over the past three months, up from 60 percent in October.

Five of the seven banks that originated subprime mortgage loans noted they had tightened their lending standards on such loans, similar to the proportion in October.

About 60 percent indicated demand for prime residential mortgages had weakened over the past three months and 70 percent noted weaker demand for non-traditional and subprime mortgage loans.

Banks were asked about their expectations for delinquencies and charge-offs on loans to businesses and households in 2008. "On balance, the responses indicate that large majorities of domestic and foreign banks expect a deterioration in loan quality in 2008," the Fed said.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 109 433 13,330
MORTGAGES 114 591 17,349
FORECLOSURE NOTICES 11 93 3,391
BUILDING PERMITS 0 366 30,930
BANKRUPTCIES 76 352 12,695
BUSINESS LICENSES 21 108 4,597
UTILITY CONNECTIONS 77 564 19,457
MARRIAGE LICENSES 29 151 4,060

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