A survey found that banks are becoming stricter when it comes to loan screening amid the growing burden of loans to businesses and consumers due to high interest rates in the United States.
According to the results of a survey on bank lending behaviour released by the Federal Reserve System (Fed) on the 31st, managers in charge of credit operations at US banks responded that they strengthened their lending attitudes in both corporate and household loans in the second quarter (April to June).
In other words, it means that the screening conditions for determining whether a loan is possible are strictly evaluated or the loan limit is lowered even if a loan is approved. Regarding loan attitudes in the second half of this year, credit managers also replied that they expected to further tighten their loan standards.
As the economic outlook for the second half of the year is expected to be unfavourable or more uncertain than before, the expected decline in collateral value and credit rating was cited as the main background for strengthening lending attitudes.
In its report, the Fed said, “Major banks cited a decrease in risk tolerance, expectations of deteriorating liquidity positions, concerns over funding costs and deposit outflows, and concerns over changes in laws, supervision, and accounting standards as major reasons for strengthening lending attitudes”.
Previously, at the Federal Open Market Committee (FOMC) meeting in July, the Fed raised its benchmark interest rate by 0.25 percentage point to 5.25-5.50%. The United States have had their highest interest rate increase since 2001.
As of the end of July, the average interest rate on a 30-year fixed-rate mortgage in the US jumped to the mid-7% range in the aftermath of the base rate hike.