Banks were much more giving in 2010 than previous years when it came to giving out quality loans and credit cards, according to a new survey released by the Federal Reserve. In the survey, it was revealed that borrowers have gotten better about paying off their debts. As a result, banks gave out more loans last year and are expected to provide even more funds in 2011.
Lending Standards Are Loosening
The survey, also known as the central bank’s Senior Loan Officer Survey, revealed that a good number of banks expect to give out higher quality consumer loans this year. This is partially based on the improvements they saw in overall debt management in 2010.
Of the 57 domestic banks and 22 branches of foreign banks surveyed between Dec. 22 and Jan. 11, about 50 percent expect improvement in 2011. This is great news for individuals looking to take out mortgage loans, personal loans and want credit card offers.
Delinquencies Expected to Decrease in 2011
In addition to feeling comfortable with loosening their credit standards, the survey found lenders also anticipate continued improvements in delinquencies and charge-offs in every loan category during 2011.
Consumers have been much better about paying off their loans and credit cards, something that has made all types of default reduce. They’re expected to continue on this track.
Lenders acknowledged that a large determinant in how well borrowers will be able to manage their debt depends on whether they’re employed, which is why banks in the survey noted they expect improvements, assuming that nationwide economic activity continues at a gradual pace that falls in line with consensus forecasts.
The good news is on the whole, banks expect economic and delinquency improvements this year, which means they will be willing to ease their standards for borrowers–a definite win-win for everyone involved.
