Are banks easing their underwriting standards?
Although industry underwriting standards tightened down briefly during the past decade’s economic crisis, recent trends have shown that more banks are easing their standards, according to the Office of the Comptroller of the Currency’s 19th Annual Survey of Credit Underwriting.
Among other factors, the report identifies an industry-wide increase in liquidity and banks’ increasing risk appetites as large contributors to the recent trend. John Lyons, Senior Deputy Comptroller and Chief National Bank Examiner, also cited the stabilizing economic environment as a major contributor.
While overall trends show loosening standards, underwriting for certain product types appear to remain unchanged. Leveraged loans and asset-based loans have noticed steady increases in eased underwriting standards while commercial leasing and agricultural loans have remained largely unchanged.
For more information on best practices in underwriting standards feel free to watch our on-demand webinar, the 5 C’s of Credit: Enhance your Credit Quality.
For detailed survey findings, visit the 2013 Survey of Credit Underwriting Practices.