With economic conditions getting tighter, banks appear to be figuring out that it's time to get looser.
Lending conditions, particularly for businesses, are finally beginning to thaw after five years of financial lockdown, according to the latest Fed Senior Loan Officer survey.
Though banks are still hesitant to lend to lower-quality homebuyers, they are indicating a willingness to get money flowing to firms and commercial real estate, in particular.
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"In fact lending standards are now as loose as they have been in the history of the survey for small firms, and not far off for larger firms" and commercial real estate, Hans Mikkelsen, credit strategist at Bank of America Merrill Lynch, said in a report for clients. "For residential real estate there was a small—but noticeable—shift to net easing of lending standards for prime loans."
The financial crisis of 2008 and 2009 emanated from ultraloose lending standards that led to a collapse of the subprime mortgage business and the downfall or near-downfall of some of the industry's biggest names.
Under political and regulatory pressure, banks have since taken what amounts to a baby-out-with-the-bathwater position toward lending, so that even high-quality borrowers have a hard time getting money.
The result has been the worst real estate market since the Great Depression, with the sector just getting restarted.
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In the meantime, banks have rolled to record profits thanks to a taxpayer-funded bailout, and cheap money and liquidity from the Federal Reserve.