Yesterday, the Federal Reserve released its April 2009 Senior Loan Office Opinion Survey on Bank Lending Practices. The survey collected information concerning supply and demand for loans to businesses and households in February, March and April 2009. The survey also asked banks about expected charge-offs and delinquencies, as well as international trade finance. The Fed received responses from 53 domestic banks and 23 U.S. branches of foreign banks.

The Federal Reserve concludes that the "subtle loosening" of lending policies, revealed in the January survey continued throughout the late winter and early spring of 2009, although the number of institutions reporting a tightening of lending practices remained high. Commercial and industrial lending practices by both domestic banks and foreign branches were slightly relaxed, with 40% reporting a tightening in lending practices, down from 65% in January. Approximately 60% of lenders reported a decline in demand for commercial and industrial loans.

The survey reported a tightening of lending standards for residential real estate lending since January, with 50% reporting tightening of standards for both prime and nontraditional home mortgages. 50% of lenders also reported a tightening of standards for home equity lines of credit, though this figure was down from 60% in January.

The percentage of lenders reporting tightening of standards for credit card loans remained steady at 60%. The number of respondents reporting an increase in minimum credit scores for credit cards increased slightly over January to 55%. Tightening of other consumer loans was down from 60% in January to 50% in April. The number of respondents reporting weakened demand for consumer loans fell sharply since January to 20%.

Lenders also reported on their expectations for loan quality in 2009. Approximately 70% reported that their loan quality is likely to deteriorate overall, and over 90% expected such deterioration for nontraditional mortgages, CRE loans and credit card loans.

When asked about their provision of international trade finance, 65% of domestic and 80% of foreign lenders reported providing such credit. Approximately half of lenders reported a tightening of such practices, citing an uncertain economic climate abroad and reduced tolerance for risk. Weaker demand for international trade finance was reported by 70% of domestic lenders, while only 10% of foreign lenders reported such a decline.

The Senior Loan Office Opinion Survey is issued quarterly, with the next report expected in early August.