The rules hurt borrowers who were prime or near-prime credit risks. Super-prime borrowers continued to get loans.
Bankers point out that many of the more risky borrowers were creditworthy. “Exactly the people that need the loans the most,” one said.
Nowadays more housing loans are being made. And more of them are going to prime and near-prime borrowers. And now even sub-prime borrowers are benefitting.
Banks are also granting more home-equity loans and lines of credit. This is partly because home values are rising. This leaves more homeowners with equity they can use.
Auto loans did not suffer as much during the recession. Most people kept making car payments even if not making mortgage payments. It is easier for a bank to resell a car that has been repossessed than it is to sell a foreclosed house.
Regulators are still careful about lending practices. A banker said, “Banks are relaxing their credit standards slowly and carefully.”
More credit cards are being offered. A banker said when it comes to offering credit cards, “banks have gone pretty much back to normal.” However, borrowing limits are lower.
New rules make it much harder to raise interest rates on delinquent borrowers.
Source: The Wall Street Journal March 29, 2014