Banks Lending More Today Since 1994

A new report from the Federal Reserve revealed that banks are more willing to lend money to borrowers than they have been in 17 years. However, while big banks are more interested in handing out money to individuals than businesses, consumers have shown little interest in taking on loans in general recently.

Banks Show Greatest Desire to Lend to Consumers Since 1994

According to the Senior Loan Officer Opinion Survey released on Monday by the Federal Reserve, banks have been more interested in lending money to consumers than they have since 1994. In an effort to lure consumers in, they have continued to ease their lending standards while businesses have had a more difficult time receiving the same treatment.

The problem banks have faced, however, is that consumers have not been very interested in acquiring loans. In fact, with the exception of auto loans, all installment loans remained flat and mortgage demand even slid. Consumers haven’t even been interested in opening up credit cards. As a result, banks have suffered smaller profits.

Why Consumers May Not Be Interested in Loans

For those who took notes during the financial crisis and recession, there’s no question as to why so many consumers have fallen away from the credit/lending system. After living on borrowed money for years, people suffered eliminated jobs, foreclosures, bankruptcies, credit card cancellations and tightened lending standards.

With few remaining options available, consumers were forced to live within their means. Of course, this didn’t stop many from suffering subprime credit scores and the shame of not being able to make ends meet. After overcoming these challenges, many have realized they don’t want to go down that road again.

For those who are interested in taking out new loans and credit cards, however, it appears this is a good time to it. But before grabbing the first opportunity available, it’s good to explore lending options across the board to find the best rates.