US housing sale

UPDATE: Mortgage Demand Cools In Last 3 Months


By Robert Schroeder


WASHINGTON (Dow Jones) -- Domestic banks reported weaker demand for mortgages
to purchase homes in the last three months, the Federal Reserve said in its
January senior loan officer survey.


At the same time, domestic banks surveyed by the Federal Reserve said they
eased terms for commercial real-estate lending in 2005, citing aggressive
competition from other banks.


Almost 30% of banks surveyed by the Fed said they reduced spreads of loan
rates over the cost of funds in 2005. Another 25% said they raised the maximum
size of the loans they were willing to extend.


Sixty percent of foreign institutions, meanwhile, said they narrowed spreads
of loan rates over their cost of funds.


The Fed polled 56 domestic banks and 19 foreign banks for the quarterly
survey.


Over the last three months, about 10% of domestic commercial banks reported a
further easing of lending terms for commercial and industrial loans, the Fed
said.


Moreover, 45% of those banks said they'd trimmed spreads of loan rates over
their cost of funds for such firms.


Sixteen percent of domestic banks reported higher demand for commercial and
industrial loans in the past three months.


Credit standards for residential mortgage loans were unchanged since October,
the Fed said. But 44% of domestic banks reported weaker demand for mortgages to
purchase homes.


About a quarter of respondents said they increased the minimum percent of
outstanding credit balances required to be repaid each month.


Demand for consumer loans, meanwhile, fell since October, with about 30% of
domestic banks reporting weaker demand.


The Fed noted bankruptcy filings spiked in September and October in advance
of tougher bankruptcy laws that went into effect on Oct. 17.


(END) Dow Jones Newswires