Aug. 5 (Bloomberg) -- U.S. banks are seeing an increase in demand for credit and are providing loans more readily to home buyers and businesses, according to a Federal Reserve survey.
“Domestic banks, on balance, reported having eased their lending standards and having experienced stronger demand in most loan categories over the past three months,” the central bank said in its quarterly survey of senior loan officers released in Washington today.
The report adds to evidence that credit conditions are contributing support to an economy beset by federal budget cuts. The Federal Open Market Committee reviewed the report at a meeting last week at which it concluded that “economic growth will pick up from its recent pace.”
Banks reported easing lending terms to businesses of all sizes as demand picked up and competition increased. The Fed described the fraction of domestic banks easing their terms on commercial and industrial lending as “moderate to large.”
A “modest” group reported easing standards on prime residential and non-traditional mortgage loans while a “large” fraction of banks in the survey saw increased demand for mortgages.
Banks in the U.S. have boosted lending as the economy gains strength. The total value of loans at U.S. banks climbed 2.9 percent in the past year to $7.3 trillion in June, according to a Fed report last week. Lending to businesses led the way, with commercial and industrial loans climbing to $1.56 trillion in June, an increase of 8.5 percent from a year earlier.
The improvement in lending hasn’t translated to broad-based economic growth. The economy grew 1.7 percent in the second quarter of 2013 and employers added 162,000 jobs in July, the fewest since March, according to a Labor Department report.
Banks are seeing improved conditions across a range of loans. A “moderate”-sized group of banks reported easing their standards on auto loans while a “small” group eased credit card and consumer loans, the survey showed.
“Demand for all three types of consumer loans asked about in the survey had reportedly strengthened, on balance,” the Fed said.
The survey was conducted from July 2 to July 16 and garnered responses from 73 domestic banks and 22 U.S. branches and agencies of foreign banks. The Fed doesn’t identify the banks that were surveyed.
The central bank has tried to improve the flow of credit by holding its target interest rate near zero since 2008, undertaking three rounds of bond purchases and increasing its surveillance to ensure banks could lend during a severe downturn.
To contact the reporter on this story: Joshua Zumbrun in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Chris Wellisz at email@example.com