According to a Federal Reserve survey, banks expect to tighten lending standards across all loan categories.

Senior loan officers across the country expect credit standards to tighten in the second half of 2022. Among the reasons cited in a Federal Reserve survey are deterioration in borrowers’ debt-servicing capacity; collateral values; credit quality of loan portfolios; and an expected increase in the exposure to interest rate risk due to higher inflation or inflation risk. According to the Federal Reserve survey, “On balance, banks reported expecting to tighten lending standards across all loan categories … a significant net share of banks expected to tighten standards for nonconforming jumbo residential mortgage loans … and a modest net share of banks expected to tighten standards for GSE-eligible residential mortgage loans.” The survey also looked back at the second quarter of 2022. Senior loan officers said that, over the second quarter, banks reported unchanged or tighter lending standards for most residential real estate (RRE) loan types and home equity lines of credit. Banks, on net, reported basically unchanged standards for the following types of mortgages: government-sponsored enterprise (GSE)-eligible; government; qualified mortgage (QM) non-jumbo, non-GSE-eligible; and Non-QM jumbo residential. A moderate net share of banks tightened standards for subprime residential mortgages, while modest net shares of banks tightened standards for QM jumbo and Non-QM non-jumbo residential mortgages, as well as for HELOCs. 

Source: National Mortgage Professional