Federal Reserve: Consumer Interest, Home Loan Demand Take a Dive
As the Federal Reserve hikes up Florida home loan rates, along with nationwide interest, it concluded its quarterly survey of lenders in April. Overall, 57 domestic banks and 19 foreign banks operating in the U.S. were polled?
The results?
Banks reported a continued decrease in demand for consumer and mortgage loans, but the pace of slowing for mortgages appeared to ease.
According to the Wall Street Journal, a net fraction of more than one-fourth of domestic banks reported weaker consumer loan demand in the survey. That figure was about the same percentage as in the Fed’s January survey, while representing a larger pool of responding lenders.
Similarly, a net fraction of one-fourth of domestic lenders reported weaker demand for mortgages to purchase homes. But the Fed described this measure as “considerably smaller” than in the January survey, when a net fraction of 44% reported slower mortgage demand from home buyers. In other words, the landing is appearing soft; Florida home loans are being acquired in greater number.
What about the issue of credit?
Domestic banks reported little change from the previous three months for credit card and non-credit card consumer loans. Meanwhile, about 10% of domestic banks said they had eased credit standards for residential mortgages.
In the market for business and commercial real estate loans, the Fed survey shows domestic banks and foreign banks had differing experiences with demand.
Among domestic banks reporting easier business-loan credit standards and terms, nearly all cited “more-aggressive competition from other banks or nonbank lenders as an important reason for having done so,” the Fed said. “Increased liquidity in the secondary market for these loans and increased tolerance for risk” were cited as reasons for looser lending practices.
These findings mirror what we’ve recently reported. The 2006 housing market may not be as prosperous as years past, but Florida home loan demand is returning as months pass by.
