'The credit crunch has started': Here's what tighter lending standards mean for American consumers and businesses as banks navigate the SVB wreckage
First, what's a credit crunch?2014 paper on the Federal Reserve's websiteBanks have two key concerns, Brett House, professor of professional practice in economics at Columbia Business School, told Insider.
"Many more lenders were tightening at the beginning of 2023 and that's only going to continue," Greg McBride, chief financial analyst at Bankrate.com, told Insider. The Fed survey found a significant net share of banks raising lending standards for credit card loans, and a moderate share toughening requirements for auto and other consumer loans.
House said lenders may also look for long employment histories, solid and upper levels of income and consider if they have lengthy relationships with prospective borrowers. Tighter lending standards may have a big impact on floating-rate loans versus fixed loans, CFRA equity analyst Alexander Yokum told Insider. The average mortgage rate paid by most Americans has"barely gone up" as they bought homes before the Fed's latest rate cycle began.
. The NY Fed said the share of current debt shifting into delinquency rose for almost all types of debt. logged big wage gains
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