In general banks have stopped tightening standards (they are already very tight), and demand has stopped falling (there is little demand for loans) – and a special question showed banks are more “upbeat” on delinquencies and charge-offs …
From the Federal Reserve The January 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices
Overall, the January survey indicated that a modest net fraction of banks continued to ease standards and terms for commercial and industrial (C&I) loans over the fourth quarter while banks reported small mixed changes in their lending policies for other types of loans to businesses and households. Similarly, the respondents reported a moderate increase in demand for C&I loans but little change, on balance, in demand for other types of loans.
And here is a special question “on banks’ outlook for asset quality in 2011”:
The January survey included a set of special questions that asked banks about their outlook for delinquencies and charge-offs across major loan categories in the current year, assuming that economic activity progresses in line with consensus forecasts. This special question has been asked once each year during the past five years. In the January survey, expectations were significantly more upbeat than in past years. Moderate to large net fractions of banks reported that they expected improvements in delinquency and charge-off rates during 2011 in every major loan category.
The responses indicated that banks were least likely to expect improvement in the quality of residential real estate loans this year. About 20 per cent of banks, on net, reportedly expect improvement in nontraditional closed-end loans, and about 35 per cent of banks indicated they expect improvement in HELOCs. Almost 40 per cent of respondents expected improvement for prime closed-end loans. Large banks were somewhat more likely than small banks to report expectations of improvement in the quality of residential real estate loans.
The survey also found that about 50 per cent of banks, on net, expected improvement this year in the quality of consumer loans, including both credit card loans and other consumer loans. Similarly, about 55 per cent of banks, particularly large banks, expected improvement in the quality of CRE loans.
Here is the full report.