Its Easier To Get A Loan

Its Easier To Get A Loan

WASHINGTON – Aug. 5, 2014 – The home mortgage market improved last quarter as demand increased and many banks eased their lending standards for the most creditworthy borrowers, the Federal Reserve said Monday.Banks also loosened lending criteria for a variety of other consumer and business loans as the economy improved and demand picked up.The developments could foreshadow a turnaround in housing, which slowed this year amid last year's increases in mortgage rates and higher home prices. More favorable credit conditions have been cited as a driver of stronger economic growth recently. Last week, the government said the economy grew at a better-than-expected annual rate of 4 percent in the second quarter.Credit standards for many loans, including mortgages, are more stringent than before the 2008 crisis, but they've eased in recent months, the Fed's senior loan officer survey shows.Mortgage demand started to flag as borrowing costs edged up after Federal Reserve officials signaled in May 2013 that the central bank would soon wind down bond purchases holding down long-term interest rates.Rates for 30-year fixed mortgages rose nearly a percentage point to 4.46 percent by the end of last year. But rates have drifted down (4.12 percent last week), in part because the Fed indicated it's in no rush to raise short-term interest rates.Half the banks surveyed by the Fed in July said demand for prime mortgages was stronger the past three months. Lenders had reported weakening demand the previous three quarters.Even more encouraging, nearly a quarter of the banks said they eased credit standards for prime mortgages, the most since the 2007 housing crash. Only about 6 percent toughened their criteria.Several large banks also loosened standards, boosted credit limits and reduced the minimum credit score for credit card loans. A surge in borrowing also boosted business loans, with more than 30 percent of banks citing stronger demand from businesses; about 5 percent reported weaker demand.About 11 percent of banks surveyed eased their standards for loans to midsize and large companies, and 8 percent did so for small businesses, while none tightened.Copyright 2014 USA TODAY, Paul Davidson. Seth Perlman, AP