Fed Survey: Bank Lending Tight Through Mid-2010

MARCY GORDON

WASHINGTON (AP) — The Federal Reserve said Monday most banks expect their lending to remain tight through the second half of next year, with the exception of mortgage standards, which already are loosening a bit.

The Fed's latest survey of loan officers found that about 20 percent of U.S. banks tightened their lending standards on prime home mortgages in the April-June quarter, down from around 50 percent in the previous quarter and a peak of about 75 percent a year ago.

Meanwhile, 45 percent of banks say they tightened standards on nontraditional mortgages, such as adjustable-rate loans with multiple payment options, down from 65 percent in the April survey and around 85 percent a year ago.

Around 35 percent of U.S. banks in the July survey reported tightening their lending standards for credit cards, down from nearly 60 percent in the previous survey and around 65 percent a year ago.

"The report tells us that credit is not becoming more readily available, but also that the credit freeze is at least moving in the direction of a thaw," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities.