Real Estate Watch


July 31, 2005|By Bloomberg News

Banks ease standards on mortgage lending for 1st time in 11 years

Banks, faced with rising mortgage competition as home sales advance, have eased lending standards for the first time in 11 years.

The Office of the Comptroller of the Currency's annual survey of underwriting surveyed the largest 71 institutions, whose $2.9 trillion of loans represent 90 percent of outstanding national bank loans.

The agency's survey said banks remain sound, even as it urged lenders to be more cautious in lending in the future. Banking regulators have said they are looking at the growth of adjustable-rate and interest-only mortgages with some concern.

"Those portfolios have experienced a lot of growth and are relatively unseasoned," said Barbara Grunkemeyer, the agency's deputy comptroller for credit risk. "We probably need to keep a closer eye on those portfolios."

- Bloomberg News

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