Banks Remain Reluctant To Lend

The Federal Reserve in a recent survey of senior loan officers and banks said they lent less from May through July, as demand for loans dwindled further and the creditworthiness of potential loan recipients worsened, according to CNN Money.

The only category of loans where banks reported greater demand was prime residential mortgages, home loans to borrowers with the highest credit quality. Still, nearly 90% of respondents reported that lending standards were currently tighter than average for both subprime and prime home loans.

Half of the banks surveyed said they lowered credit limits, and 35% reported tightening standards for credit card applicants. None said they loosened standards or raised limits for existing customers. About 20% of banks reported weaker demand for all types of loans.