Loan demand for commercial and residential real estate has strengthened, but U.S. banks are mostly maintaining tight lending standards, according to the Federal Reserve's July 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices.
According to the Fed's survey, ‘a modest fraction of domestic banks reported that they had eased lending standards on commercial real estate loans over the past three months, while a relatively sizable fraction, on net, continued to indicate that demand for such loans had strengthened.’
On the residential side, the Fed found that lending standards for residential prime mortgages during the second quarter were ‘little changed’ and lending standards for nontraditional mortgages had ‘tightened somewhat,’ even though demand has not abated.
The Fed's survey also included a set of questions about the updated version of the Home Affordable Refinance Program (HARP 2.0).Â
‘A majority of the large banks indicated that they had participated in HARP during the past three months, though only one-third of the other banks reported having done so,’ the Fed's survey reported. ‘About one-third of the respondents that had participated in HARP reported that over the past three months, between 30 percent and 70 percent of all refinance applications were attributable to HARP, while an additional one-third reported that between 10 percent and 30 percent were HARP applications. In addition, about two-thirds of those participating in HARP anticipate that more than 60 percent of these applications will be approved and successfully completed.’
The Fed survey covers 64 U.S. lenders and 23 U.S-based branches of foreign banks.