Credit cards, auto loans and other personal loans are all getting easier to come by, more than a year into a pandemic that spooked lenders and caused them to tighten lending standards significantly, the Wall Street Journal reported. The net share of banks that loosened underwriting standards for credit cards hit a high in roughly the first quarter, according to a survey of loan officers conducted by the Federal Reserve. The net share of banks relaxing underwriting on other consumer loans such as installment loans also notched a record. For auto loans, that share was the highest level in more than eight years. For example, about 29% of banks eased their underwriting standards for credit cards in the first quarter, and only 2% tightened them, according to the Fed. About 19% of banks loosened auto underwriting, while less than 2% tightened standards. The loosening reflects a pandemic about-face in consumer lending. A year ago, lenders expected people to stop paying their loans en masse, and they made loans harder to get. But then the government stepped in with expanded unemployment benefits and stimulus checks, and the expected flood of defaults never happened. Now banks have a different problem: Loan demand is down. Many people are even paying off their credit card balances. And while that signals that Americans are faring well even in the pandemic, it is problematic for lenders looking to boost revenue.
