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The credit, a prisoner of the crisis in the U.S.

Ana B. Nieto - / Thursday, August 12, 2010

Luis M., 38, found in May he wanted to buy the house. Freelance designer and developed a significant career in New York, Luis was ready to pay that cost $ 480,000 an apartment I'd seen in Brooklyn. For years she had saved to have an entry of 180,000 without exhausting their liquidity. Your credit (certified by credit agencies in the U.S. determine whether or not someone has risks) was impeccable and, although he acknowledges that last year, due to the crisis, he won slightly less, their income has been very stable over his career. Four years ago I would have put the red carpet at Citibank, where he applied for credit. Today, months later and after many long to give the institution worthy of a collection of anecdotes, has thrown in the towel.

Luis went to a mortgage broker who arranged the grant of a further by another entity.

The case of this designer is significant what happens in the U.S., a country that despite the extraordinary measures of monetary policy, which was revived modestly on Tuesday, the Fed, there is fluidity in the credit.

And there are two reasons for this. The first is that in an environment of mistrust, banks are (or know more) customers right to be paid, especially now that examine the risks of high magnification loupe and have tightened lending standards. On the other hand, there is talk of deflation, there is no land for housing prices nor ceiling for the rate of unemployment. Therefore, neither citizens nor businesses demand loans.

This is evidenced by statistics from the Fed this week found that consumer credit fell by 1,300 million dollars in June following its downward path, which was more pronounced at the beginning of the year. Analysts believe that Barclays has been able to reach the ground, where they will spend time.

In the study of the Fed's April bank lending practices shows that some banks have tightened their lending standards for small businesses and homes and, in general, demand for credit "has weakened further." Almost all banks have reported a low demand "due to reduced borrowing by customers for their business, equipment and inventories."

It's something that also checks the National Federation of Independent Business (NFIB, "the voice of small business") which states that, although in July was slightly improved lending, it remains "close to a record low point" . 13% of employers said it was difficult to obtain credit but the majority explained that it does not need or will not borrow. Only 4% said they considered a problem not getting access to credit.

The NFIB index measures the optimism of small business that is "typical records of an economy in recession." It is no surprise to Dave Rosenberg, economist at Gluskin Sheff, and one of the analysts that less is driven by optimism. Explained yesterday followed in the process of undoing the excesses of the credit cycle.

Low credit score
The prices and job uncertainty have also less attractive to mortgage rates as low as three decades ago (4.57% fixed for 30 years) that the Fed guarantees from this week with his speech. Applications for mortgages will not grow.

And when there, the process is longer and more complicated than ever as in the case of Luis. However, many Americans are staying out of the market by the damage the crisis and excessive lending has caused in your credit history. According to FICO, the company whose methods are used to make the ratings of citizens, 25.5% of consumers (nearly 43.5 million people) have a rating of 599 or lower, which they define as high risk and containment in a bank like the present, denies them new credit cards, mortgage or loan for the car. In the recent past, and before the Great Recession, the average number of people with ratings below 599 hovered around 25 million.

"In the last two years, according to figures from FICO, 2.4 million people with bank accounts have fallen below the rating that places them as high risk. It's something that complicates relations with banks, financial service companies or landlords. Restore history can take years.

"A 17.9% of citizens have a rating higher than 800 (triple A). It is more than the historical average, because many people have cut their spending and pay down debt to ensure its creditworthiness.

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