The latest Survey of Credit Underwriting Practices shows that banks are easing credit for both consumer and commercial loans. The survey, which was conducted by the Office of the Comptroller of the Currency (OCC), indicates that "banks that eased standards generally did so in response to changes in economic outlook." This is a significant finding because banks are recognizing the improvement in the economy, and are anticipating greater demand for loans.
The findings of the OCC survey, which was conducted during 2013 and released in January of 2014, mirror the Money Anxiety Index showing an improvement in the level of consumer financial anxiety during the same time period. During 2013, the Money Anxiety Index declined by 13.3 points - from 92.4 in January to 79.1 in December. The decrease in the level of financial anxiety shows that consumers are more optimistic about their finances, and are more likely to take on loans to finance purchases.
Consumers borrow more and spend more as their level of money anxiety subsides. The Money Anxiety book demonstrates how consumers' spending declined during the Great Recession, when the level of money anxiety was extremely high. However, during 2013, the level of consumer financial anxiety subsided, and consumers increased their spending including purchases of durable goods that are often financed through loans and credit.
"The ease of credit by banks is a confirmation that consumers feel less financially anxious" said Dan Geller, Ph.D. Behavioral Economist, and author of Money Anxiety, "I foresee greater demand for consumer and commercial loans in the second half of this year."