The U.S. Treasury Department’s monthly bank lending survey for August 2009 was released on October 15, 2009, and it showed another decline in loan portfolios. The overall outstanding loan balance (of all respondents) fell 1 percent from July to August at the top 22 participants in the Capital Purchase Program (CPP), due mainly to decreased demand from borrowers, payment of outstanding debt, charge-offs by banks, and some seasonal patterns. Total origination of new loans at the 22 surveyed institutions decreased 17 percent from July to August. In August, the 22 surveyed institutions originated approximately $235 billion in new loans. Total originations of loans by all respondents rose in 1 category (other consumer lending products) and fell in 7 loan categories (mortgages, home equity lines of credit (HELOCs), credit cards, commercial and industrial (C&I) renewals and new commitments, and commercial real estate (CRE) renewals and new commitments).
New home purchases and refinancing originations fell in August. Respondents reported that both the number of fundings and the number of mortgage refinancing applications declined in August as interest rates were higher than in previous months, providing less incentive for homeowners to refinance. HELOCs saw a decrease in total originations, and institutions indicated that demand is below 2008 levels. Outstanding credit card balances held by the surveyed institutions were flat in August, indicating that consumers are spending conservatively and paying down existing debt. Other consumer lending was the only consumer category in which originations increased in August, as the onset of the academic year spurred student loan disbursements and the “Cash for Clunkers” program increased demand for auto loans. Banks again reported that demand in both the commercial real estate (CRE) market and the C&I market is well below normal levels.
Please click the following link to view the full Treasury report: Monthly Lending and Intermediation Snapshot.
Gregg D. Killoren
victoria1014
