Banks are loosening the purse strings for consumer borrowers.
Credit cards, auto loans and other personal loans are all getting easier to come by, more than a year into a pandemic that spooked lenders and caused them to tighten lending standards significantly.
The net share of banks that loosened underwriting standards for credit cards hit a high in roughly the first quarter, according to a survey of loan officers conducted by the Federal Reserve. The net share of banks relaxing underwriting on other consumer loans such as installment loans also notched a record. For auto loans, that share was the highest level in more than eight years.
For example, about 29% of banks eased their underwriting standards for credit cards in the first quarter, and only 2% tightened them, according to the Fed. About 19% of banks loosened auto underwriting, while less than 2% tightened standards.
The loosening reflects a pandemic about-face in consumer lending. A year ago, lenders expected people to stop paying their loans en masse, and they made loans harder to get.
