Research and Statistics

Fed: Banks make credit flow a bit easier


Consumers’ appetite for cards grew in the third quarter, while banks were somewhat more willing to serve up new cards

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Fed: Banks make credit flow a bit easier
Fed: Banks make credit flow a bit easier

Consumers’ appetite for borrowing on credit cards grew robustly in the third quarter, while banks also increased their willingness to serve up new cards, according to a Federal Reserve survey released Monday.

Nine of 50 large U.S. banks surveyed said they saw demand for card borrowing as “moderately stronger” than the previous quarter, excluding seasonal variation, the Senior Loan Officer Survey said. Just two banks said demand was “moderately weaker.”

When it came to approving new credit card applications, three banks said their lending standards “eased somewhat.” The rest were basically unchanged.

The view from the bankers’ desks meshes with other measures of the consumer economy.

“Certainly we are seeing a gradual uptick in growth of credit card balances, and seemingly a bit more willingness on consumers’ parts to take on that debt,” said Scott Hoyt, senior director of consumer economics at

Balances on credit cards have been growing steadily, rising for the sixth month in a row in August, Fed figures show.

Since the end of 2014, card balances have grown about $29 billion, reaching their highest point since December 2009, according to the Fed’s monthly consumer credit report.

Demand for card borrowing has been growing each quarter since the first half of 2013, data from the loan officer survey shows. Banks have modestly eased standards on consumer loans and credit cards each quarter since mid-2010.

The Fed survey was conducted at the end of September and includes responses from 69 large U.S. banks. A separate panel surveyed 23 branches and agencies of foreign banks.

In addition to asking about new cards, the survey looked at terms that existing cardholders face. Of 48 banks, four said they “eased somewhat” standards for credit limits, while two said they shrunk their interest rate spread, or the markup on APRs over and above their cost of funds. Just one said it eased its minimum required credit score, and none changed the minimum percent of outstanding balance per monthly payment.

Auto  loans, mortgages
“A few large banks reported having eased their standards for credit card loans,” the Fed report on the survey said, “and several large banks indicated they had eased standards for approving applications for car loans.”

Asked about auto loans, six of 62 banks said they “eased somewhat” credit standards for approving auto loans. As for consumer installment loans, six of 65 banks said they were “somewhat more willing” to lend, while one was “somewhat less willing” than in the previous three months.

Banks loosened their grip on home loans as well. For mainstream non-jumbo mortgage loans, eight banks of 58 said they eased credit standards, while the remainder were unchanged.

See coverage of previous survey:Subprime card applicants still facing tight credit

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