Consumer Loans Are Harder To Obtain

U.S. banks continue to toughen standards for consumer loans, including credit cards, while offering easier terms to businesses, the Federal Reserve said today.

The Fed said in a survey of senior bank lending officers that “a large number of banks said they had raised standards on credit card loans and many said they had done so for other consumer loans.”

“The recent rapid growth in home equity loans was in part the result of substitution for unsecured forms of consumer credit,” as well as increased promotion, the Fed said.

As banks faced mounting losses from credit cards loans, they made more secure home equity loans where the borrower must put up their houses as collateral, according to banking experts.