Banks Toughen Terms on Loans

Wall Street Journal (05/06/08) P. A3; Reddy, Sudeep
The Federal Reserve's new poll of banks' senior loan officers indicates a widening credit crunch. Nearly 33 percent of the 56 domestic banks participating in the April survey said they have raised their credit-card loan standards over the last three months, compared to 10 percent in January. Additionally, about 70 percent of banks reported tightening standards for new home equity lines of credit over the last three months, while approximately 50 percent of the banks polled tightened terms on existing home equity lines of credit over the past six months due residential prices declining to below their appraised values. Standards on prime mortgages were tightened by more than 60 percent of banks in the poll, while at least 75 percent reported tightening standards for nontraditional and subprime mortgages in the past three months. An estimated 80 percent of the banks tightened their lending standards for commercial real estate loans.