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  • Writer's pictureRealFacts Editorial Team

Banks Make it Harder to Get Approved For Loans in the First Quarter


Loan paper stamped with approval

Recent survey data from several banks around the country have shown that most banks have tightened their credit requirements in order to get approved for loans. This goes for car loans, home equity loans, consumer loans, and C&I (Commercial and Industrial) loans. Karishma Vanjani of Barron’s wrote, “Nearly 20% of all banks reported tightening credit for the widely watched commercial and industrial (C&I) loans category in the first quarter for large and middle-market firms or companies with annual sales of above $50 billion, according to the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices published on Monday. C&I loans are only made to a business or corporation. The tightening is up from 14.5% in the prior survey ... .When it came to consumers, significant net shares of banks reported tightening standards for credit card loans. For example, 24% of banks said they have increased the minimum required credit score for credit card loans versus 15% in the prior quarter.”

 

In addition to being harder to qualify for loans, demand for them has decreased remarkably. Vanjani continues, “Demand also weakened. The survey said 36% of banks reported moderately or substantially weaker demand for C&I loans versus 33% in the prior survey.” It seems that not only are less people able to qualify for loans, less people want to. This was the Fed’s goal with increased interest rates, discourage borrowing and lending in order to reduce inflation.


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