Real Estate Marketing & Beyond
What with the economy continuing to flounder, you might be surprised to learn that a rather unusual thing has happened. Banks have started lending more money again.
Banks are finally lending more money again, but only for the rich... © Sielan - Fotolia.com
According to the New York Times, banks have once again increased the flow of the borrowing tap, and loan growth, despite the fact it is still at a rather modest level, cannot be disputed, although it is mostly just strong corporate and consumer borrowers who are benefiting, the paper notes.
Due to more stringent qualifying criteria for loans being introduced over the last couple of years, many people have found it increasingly difficult to be able to actually qualify for a loan these days.
But, according to Timothy Sloan of Wells Fargo, the belief that banks aren’t doling out money anymore is wrong. “Lending is strong right now,” he said. “And it will continue to grow, based on what we are seeing right now.”
One fine example is Citigroup, which recently announced third quarter loan growth in almost all of its businesses.
Experts say that the growth in the number of loans being granted is likely due to two factors – borrowers cashing in on their credit lines, and interest rates which are at a record low.
Home loans however, have not risen, and perhaps this more than anything else is a telling sign of how much harder it is for the average person to get credit. Borrowing for mortgages and home equity loans have seen a 6.2% decline since their 2007 peak, according to data provided by the Federal Reserve.
And there’s still a long way to go before we see any real improvements, says Bernard Baumohl of the Economic Outlook Group. He said that although borrowing may have increased, the situation right now is not even close to where it needs to be for the economy to start growing properly once again, and for more jobs to be created.
