A Ray of Hope?

 

None of the large banks in the Federal Reserve?EUR??,,????'?????< Courtesy of SwiftEconomics.com

Better news appears to be emerging on the finance front. The Federal Reserve’s third quarter Senior Loan Officer Opinion Survey on Bank Lending Practices reported some easing of credit standards for prime residential mortgages among large banks over the previous three months. This marks the first net easing in the survey in more than three years.

For non-traditional mortgages (sometimes referred to as Alt-A), there was essentially no net tightening — two banks reported some tightening and one reported easing slightly. This is a significant improvement over just a few quarters earlier when there was substantial tightening of these standards.

The Fed’s third quarter survey is an indication that banks may be beginning to return to the more normal lending standards that prevailed in much of the 1990s and the first part of the 2000s. This is good news for the housing and landscape industries, allowing for the possibility of more landscape improvements.

Bank loan officers are reporting substantially different lending conditions for builders than builders have been reporting in recent  NAHB surveys. The Fed’s senior loan officer survey found fewer banks tightening standards for commercial real estate, a category that includes builders’ acquisition, development and construction (AD&C) loans.

In sharp contrast, between one-half and two-thirds of builders surveyed by NAHB said that the availability of new production credit was worse in the second quarter than the first quarter of 2010. This disconnect between the assessment of credit availability  and an aggressive regulatory crackdown continues to point to a major hurdle to a housing recovery.

– Courtesy of NAHB