Credit is getting easier to find, Fed says

By Tim Mullaney (USA Today)

The nation’s banks are slowly loosening the reins on credit, a survey of bank lending executives by the Federal Reserve said Monday.

The clearest changes in the last three months came in commercial lending and in personal loans other than mortgages, the central bank said in a quarterly report released Monday. For medium-to-large business borrowers, credit standards eased at 14%of institutions, while banks were also willing to tolerate lower interest rates, give longer loans and easier terms, the Fed said.

The survey paints a picture of improving access to credit, which got much tougher after the financial crisis in 2008 and has remained a major concern to business leaders and policy makers. Last week, the Fed reported a 14.2% jump in commercial and industrial lending by banks in December, while residential real estate lending declined and personal loans rose by 6.4%. Preliminary weekly numbers for January showed small improvements.

Respondents from the 75 domestic banks and 21 non-U.S. based institutions participating in the survey chalked up the changes mostly to more competition, even as loan demand appeared to improve.

Access to mortgage credit changed little for borrowers with good credit, the Fed reported. Only 8.5% of banks indicated that they had loosened standards for such loans, and 9.9% said they had tightened prime mortgage credit. About one bank in five said it has recently tightened credit for subprime mortgage loans.

Almost half of the banks responding said demand for mortgages to buy homes weakened in late 2013, as the number of new contracts to purchase homes dipped.

Tim Mullaney is an economics correspondent based in New York. Along with following economic data, he likes to explore how new technology changes the economy, transforming industries from Hollywood to Big Oil. He won the New York Press Club and Excellence in Technology Journalism prizes for his coverage of digital health care, written while he was in chemotherapy. Those stories helped lead to federal legislation providing government aid to doctors to adopt electronic medical records. Before joining USA TODAY in 2011, he worked at Bloomberg News and was E-Business Editor for BusinessWeek.