Banks Ease Lending Terms; Mortgage Delinquencies Dip; Three CRE Firms Make Fortune 500
- May 07, 2013
The Federal Reserve reported on Monday that U.S. banks have become a little less Scrooge-like in their lending practices in the last three months (to paraphrase the central bank, which doesn’t believe in metaphors). The April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices, which gauges the supply of, and demand for, bank loans to businesses and households, found that banks reported easing their lending standards – especially for businesses — and experienced strong demand for loans.
The report is based on responses from 68 domestic banks and 21 U.S. branches and agencies of foreign banks. A relatively large fraction of domestic respondents reported having eased standards on commercial and industrial loans, and a moderate-to-large fraction of respondents eased many terms on C&I loans to firms of all sizes, the Fed said.
The household picture was more mixed. A few domestic banks reported having eased standards on prime residential mortgages over the past three months, and for the fifth consecutive survey, respondents reported stronger demand for prime residential mortgage loans. Only a small fraction of respondents reported that they’d eased standards on credit card and auto loans over the past three months, while standards on other consumer loans had remained roughly the same.
Mortgage Delinquencies Continue to Edge Down
Lender Processing Services said on Monday that 6.59 percent of U.S. residential mortgages were delinquent in March, down from 6.8 percent in February. The company also reported that 3.37 percent of mortgages were in foreclosure, down slightly from 3.38 percent in February, but also down from 4.19 percent in March 2012.
Perhaps more importantly, LPS found that new problem loan rates (seriously delinquent mortgages that were current six months ago) have fallen below 1 percent for the first time since 2007. At 0.84 percent, the March new problem loan rate is approaching pre-crisis levels, and nearing the conditions of 2000 to 2004, when the rate averaged 0.55 percent.
LPS Applied Analytics senior vice president Herb Blecher said in a statement that a borrower’s equity position is still a key indicator of his or her propensity to default. “There has always been a clear correlation between higher levels of negative equity and new problem loan rates,” he said. “Looking at the March data, we see that borrowers with equity are actually outperforming the national average — at 0.6 percent, this group is quite close to pre-crisis norms. The further underwater a borrower gets, the higher those problem rates rise.”
Three CRE Firms Make Fortune 500
Fortune magazine released its top 500 list of U.S. companies on Monday, and coming in at number one was the Wal-Mart Stores Inc. The Arkansas-based retail leviathan posted revenue of $469.2 billion in 2012, up almost 6 percent from the previous year. Exxon Mobil Corp., which was first in the 2012 rankings, dropped to second place this year, with revenues of $449.9 billion. Most of the rest of the top 10 included the usual suspects – oil companies, car companies, and GE. Apple was a top 10 (at number 10) for the first time ever.
Among commercial real estate companies, three made the top 500 this year: CBRE Group at number 387, with revenue of $6.5 billion, Host Hotels & Resorts (number 469, $5.3 billion), and Simon Property Group (number 497, $4.9 billion).