Fed Survey On Lending

The Fed published a report on lending standards and surveyed banks on their lending practices.  Here is an interesting excerpt on residential loans:

Questions on residential real estate lending. On net, small fractions of domestic banks reported having tightened standards on both prime and nontraditional mortgage loans, marking a reversal from the slight net easing reported in the July survey for prime loans. The tightening of standards on prime mortgage loans was largely accounted for by smaller banks; large banks, on net, left standards about unchanged. Both large and other banks reported a net tightening of standards on nontraditional mortgage loans. Continuing a pattern seen since the start of the financial crisis, fewer than half of the respondents reported having made such loans. Modest net fractions of banks reported weakening demand for both prime and nontraditional mortgage loans to purchase homes.A modest net fraction of banks reported that standards for approving HELOCs hadtightened over the past three months. As with prime residential mortgage loans, that tightening in standards was largely accounted for by smaller banks. A small net fraction of respondents also reported having reduced the size of HELOCs for existing customers. On net, banks reported a slight weakening in demand for HELOCs.

So it looks like the banks are betting on more economic stagnation.  I do think the last comment on demand for HELOCs weakening is funny.  The banks have arbitrarily reduced the size of their client's HELOCs.  Is it any surprise their customers don't want more of that kind of loan product? Duh.