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CONFIDENTIAL (FR) SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System May 23, 1969 SUPPLEMENTAL NOTES The Domestic Economy Unit sales of new domestic autos declined somewhat in the second ten days of May from the advanced level of the first selling period. For the first 20 days of May, sales were at an annual rate of 8.6 million units--compared with 8.2 million units in April and 8.7 million units a year earlier. The composite leading indicator rose to a new high in April. The coincident indicator continued to rise fractionally, and the lagging indicator declined slightly. COMPOSITE CYCLICAL INDICATORS 1963 = 100 12 Leading Indicators 1969 - January February March April 144.3 146.4 145.1 148.2p 5 Coincident Indicators 164.7 166.4 167.3 16 7 .7 p 6 Lagging Indicators 177.8 181.1 182.3 18 1.1p In addition to those April increases in components of the leading indicator already reported in the Greenbook, nonagricultural placements, durable new orders, and plant and equipment contracts and orders were strong. To the extent that the April jump in the composite resulted from a bulge in machinery and equipment orders placed in anticipation of suspension or repeal of the investment tax credit, it is likely that the series will fall back in May. The Domestic Financial Situation Mortgage market. In April, the backlog of outstanding mortgage commitments--chiefly for residential loans--rose again at all savings and loan associations and New York State mutual savings banks after adjustment for seasonal variation. The level of the backlog reached in April was a fifth above a year earlier, when average housing prices and loan amounts were smaller. However, the current backlog remains extremely large relative to recent cash flows. The volume of new commitments approved by these institutions, after allowance for seasonal variation, also increased during the month, according to FRB derived estimates. The rise in new commitments apparently reflected a more optimistic near-term assessment of cash flows by these lenders, following the March-April reinvestment and tax period. Moreover, the liberal advance policy expressed by the Federal Home Loan Bank Board may have given some additional stimulus to savings and loan association lending. RESIDENTIAL MORTGAGE COMMITMENTS OUTSTANDING AT SELECTED THRIFT INSTITUTIONS Outstanding Commitments Date Total All Savings and Loan Associations 'Mutual Savings Banks (N.Y. State) Month-to-Month Change Mutual All Savings Savings Banks Total and Loan Associations (N.Y. State) ($ Billions, Seasonally Adjusted) (Per Cent) 1968 January February March April May June 8.4 8.4 8.6 8.7 8.6 8.6 5.8 5.9 6.1 6.2 6.0 5.9 2,6 2.5 2.5 2.5 2.6 2.6 -0.6 0.5 2.0 1.6 -1.5 -0.5 -0.01 1.6 2.5 2.3 -2.4 -1.7 -1.8 -2.0 1.0 0 0.8 2.3 3.2 July 8.8 6.1 2.7 2.8 2.7 August September 9.0 9.1 6.1 6.2 2.9 2.9 1.8 1.5 -0.02 1.6 October November December 9.5 9.7 9.7 6.4 6.5 6.6 3.0 3.2 3.1 3.9 2.8 -0.2 3.6 1.5 1.3 4.4 5.5 -3.0 9.9 10.1 10.3 10.5 6.7 6.9 7.0 7.2 3.2 3.2 3.3 3.3 1.5 2.6 1.7 1.7 1.2 3.3 1.4 2.5 2.2 1.1 2.3 0.2 5.9 1.4 1969 January February March April Note: Based on seasonally adjusted dollar volume. Data from Federal Home Loan Bank Board and Savings Banks Association of New York State. Reporting savings banks account for about 70 per cent of total mortgage lending in Data for savings banks and S&L's include a minor amount the industry. of nonresidential commitments. Subtotals may not add to totals because of rounding. Interest rate changes. Yields on Treasury bills have dropped around 5 to 10 basis points since Tuesday, as continuing moderate demands for bills have run into a very thin immediate market supply. Dealers' total bill holdings on May 21 amounted to only $1.1 billion. Included in the total were net short positions of more than $100 million in the under 3-month maturity area, and around $675 million of bills not immediately available for trading, and secured by long-term repurchase agreements. Bill yields have also been affected recently by the Treasury's announcement that in next week's monthly bill auction it will redeem the $200 million added to the maturing issue by the February bill-strip auction. While yields on intermediate-term Treasury coupon issues have also edged a little lower recently, due largely to official account buying, yields on long-term bonds have advanced another 5 basis points. The latter increase has reflected selling by investors seeking to obtain funds for payment of subscriptions to recently offered corporate bonds. Rates on certain short-term debt instruments other than U.S. Government securities have also advanced since publication of the Greenbook. For example, yields on short-term Federal Agency debt have risen another 5 to 10 basis points; commercial paper rates are up 1/8 of a percentage point; and the weekly 1-year prime municipal series has advanced 15 basis points. KEY INTEREST RATES '1969 April 30 Lows Highs 5.95 (1/1) 8.91 (5/21) 7.79 8.91 (5/21) 6.25 (1/7) 7.50 (5/22) 9.55 (5/22) 6.02 7.50 9.55 6.85 6.88 May 22 Short-Term Rates Federal funds (weekly average) 3-months Treasury bills (bid) Bankers' acceptances Euro-dollars Federal agencies Finance paper CD's (prime NYC) Highest quoted new issue Secondary market 6-months Treasury bills (bid) Bankers' acceptances Commercial paper Federal agencies (3124) (2/17) (1/2) (3/26) (2/6) 6.85 (5/22) 6.88 (5/22) 5.87 7.00 8.51 6.51 6.75 6.00 6.45 (2/13) 6.00 7.40 (5/22) 6.00 7.00 6.00 7.40 6.42 7.62 7.38 6.77 (1/7) (5/22) (5/22) (5/22) 5.96 7.12 7.13 6.51 6.09 7.62 7.38 6.77 6.25 6.50 (1/30) 6.25 7.50 (5/22) 6.25 7.10 6.25 7.50 5.86 (1/16) 3.90 (1/2) 6.39 (2/27) 4.55 (3/20) 5.93 4.05 6.03 4.40 6.11 (1/20) 5.91 (4/14) 6.56 (5/22) 6.32 (3/18) 6.37 5.98 6.56 6.18 6.56 (1/2) 7.26 (2/3) 7.00 (3/28) 7.64 (3/28 6.81 7.50 6.78 7.55 7.05 (1/9) 6.90 (2/20) 7.45 (4/9) 7.57 (3/21) 7.18 7.28 4.82 (1/23) 4.57 (1/2) 5.46 (5/22) 5.30 (5/22) 5.10 4.95 5.46 5.30 7.66 (1/9) 8.17 (3/3) 7.92 7.88 5.91 6.38 7.14 6.08 6.25 6.04 6.50 6.25 6.32 (3/25) (2/17) (1/7) (1/16) CD's (prime NYC) Highest quoted new issue Secondary market 1-year Treasury bills (bid) Prime municipals Intermediate and Long-Term Treasury coupon issues 5-years 20-years Corporate Seasoned Aaa Baa New Issue Aaa No call protection Call protection Municipal Bond Buyer Index Moody's Aaa Mortgage--implicit yield in FNMA weekly auction 1/ 1/ Yield on 6-month forward commitment after allowance for commitment fee and required purchase and holding of FNMA stock. Assumes discount on 30-year loan amortized over 15 years. International Developments On page II - 5 of the May 21 Greenbook it was incorrectly stated that the downward revision in the estimated net export balance for the third and fourth quarters largely reflects "growing pessimism on the outlook for exports." Actually, the principal reason for the revision is a substantial increase in the estimate for U.S. merchandise imports, as briefly noted at page IV - 4. Also, the projection of imports of services includes substantially larger interest payments than earlier calculations allowed for. The new import estimate reflects the use of estimating techniques that place somewhat greater weight than before on the effects of the continuing rise in U.S. prices and less on the moderation in the pace of real growth after 1968. Merchandise imports in the second half are now projected at an annual rate of $37.3 billion, up 9 per cent from the second half of 1968. A month ago this import increase was projected at only 6 per cent, and in the Staff Projection of February 25 (published in the March Bulletin) the implied rise in imports between second halves of 1968 and 1969 was only 3 per cent. With regard to merchandise exports, prospects for which were discussed at pages IV - 3 and 4, the latest revisions of earlier estimates are downward for commercial aircraft (untilBoeing 747's begin to be shipped next year), downward also for agricultural exports, but upward for nonagricultural exports other than aircraft and autos on account of "stronger demand pressures in Europe than earlier assumed" (p. IV - 4). The large revision in second quarter net exports of goods and services from the earlier projected $6 billion to $2.7 billion, annual rate, is due in minor part to upward revisions for imports of goods and services, but three-fourths of the revision comes from re-estimation of after-effects of the port strike on U.S. merchandise exports. March exports were somewhat larger than had been estimated, and on this account the amount of second quarter exports postponed from the first quarter is now guessed to be $200 million less than before. More impor- tant, it is now assumed that $200 million of agricultural exports and $200 million of nonagricultural exports were completely lost in the first quarter, and would therefore not help to swell second quarter exports. No appreciable revision has been made in the estimate of the underlying trend of exports adjusted for effects of the port strike. Corrections Page II - 5. End of line 9 and line 10 should read "mainly reflecting a significantly larger volume of imports than had been projected earlier." Page II - 32, second paragraph, line 3, "in 1968" should be transferred to end of sentence. Page IV - 12, the missing page reference is to pages IV - 7 to 10. SUPPLEMENTAL APPENDIX A: SURVEY OF BANK LENDING PRACTICES. MAY 1969 Respondents in the May 15 Bank Lending Practices Survey generally indicated--as they did in the previous survey--that they were continuing to experience and to expect stronger loan demand and that they had tightened lending terms and conditions further. Nearly two-thirds of the banks stated that demand for business loans had strengthened in the preceding three months, and almost one-half reported that they expected business loan demand to strengthen further in the next three months. (Table 1). Virtually none of the respondents thought that business loan demand had weakened over the previous three months, or that it would weaken in the coming three months. Most banks firmed substantially further their terms and conditions on loans to nonfinancial businesses. Over 90 per cent of the respondents indicated that they had raised interest rates on loans to such businesses--probably reflecting the March increase in the prime rate-while more than 75 per cent stiffened policies with regard to compensating Moreover, about 70 to 80 per cent of the banks balance requirements. followed more restrictive policies when reviewing credit lines or loan applications to new or nonlocal service area customers and almost 50 per cent had firmed these policies with regard to established or local service area customers. And around 70 per cent of the respondents reported that factors such as the value of the borrowe as a depositor, the source of collateral, and the intended use of the loan were scrutinized more closely in business loan applications, while about 40 per cent firmed policies in connection with standards of credit worthiness and the maturity of term loans. Lending terms and conditions to "noncaptive finance companies" were also tightened significantly further. About 65 per cent of the banks stated that they were less willing to establish new or larger credit lines to these borrowers and more than 50 per cent had raised interest rates on finance company loans. while less than 30 per cent had tightened compensating balance requirements, almost 45 per cent of the banks had adopted more strict enforcement of these requirements. Moreover, bank willingness to make certain other types of loans was also reduced further in the past three months. Banks were particularly more reluctant to grant term loans, with nearly two-thirds of the respondents reporting this policy position. Mortgage loans also came under increasing pressure with about 45 per cent of the banks indicating that they were less willing to make single family mortgage loans, while around 60 per cent were less willing toaccommodate demand for other types of mortgage loans. Approximately 40 per cent of the respondents were less willing to grant loans to brokers and participation loans to correspondent banks. However, less than 20 per cent of the banks indicated greater reluctance to grant loans in the relatively profitable consumer instalment area. SA-2 There was no significant size of bank variation in the responses to the current survey, with about the same percentage of larger banks (deposits $1 billion or more) and smaller banks (deposits of less than $1 billion) indicating strength in current and anticipated business loan demand and firming in lending terms and conditions (Table 2). This is in contrast with the February survey in which a greater percentage of larger than smaller banks reported strength in current and expected loan demand as well as firming of lending terms and conditions. Banks that firmed lending policies in the current survey usually gave reduced availability and increased cost of funds and strong loan demands as the major reasons for more restrictive lending terms and conditions. A few mentioned that their loan/deposit ratios were higher than anticipated, and one bank stated that this ratio was as high as in late 1966. Another bank also cited the limited availability of funds in the Euro-dollar market as a reason for their stiffer lending policies. NlT FOR QUOTATInN OR PUBLIrATION TABLE 1 PAGE 01 QUARTERLY SURVEY OF CHANGES IN BANK LENDING PRACTICES AT SELECTED LARGE BANKS IN THE U.S. 1/ (STATUS OF POLICY ON MAY 15, 1969 COMPARED TO THREE MONTHS EARLIER) (NUMBER OF BANKS & PERCENT OF TOTAL BANKS REPORTING) MUCH STRONGER TOTAL BANKS PCT RANKS PCT MODERATELY STRONGER ESSENTIALLY UNCHANGED MODERATELY WEAKER BANKS BANKS BANKS PCT PCT PCT MUCH WEAKER BANKS PCT STRENGTH OF DEMAND FOR COMMERCIAL AND INDUSTRIAL LOANS (AFTER ALLOWANCE FOR BANK'S USUAL SEASONAL VARIATION) COMPARED TO THREE MONTHS AGO 123 100.0 18 14.6 60 48.8 41 33.3 ANTICIPATED DEMAND IN NEXT 3 MONTHS 122 100.0 10 8.2 47 38.5 59 48.4 ANSWERING QUESTION BANKS PCT MUCH FIRMER POLICY BANKS PCT MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY BANKS BANKS BANKS PCT PCT PCT MUCH EASIER POLICY BANKS PCT LENDING TO .NONFINANCIAL BUSINESSES TERMS AND CONDITIONS: INTEREST RATES CHARGED 100.0 38.2 52.8 9.0 0.0 COMPFNSATING OR SUPPORTING BALANCES 100.0 27.6 48.0 24.4 0.0 STANDARDS OF CREDIT WORTHINESS 100.0 13.8 27.6 58.6 0.0 MATURITY OF TERM LOANS 100.0 17.1 25.2 57.7 0.0 REVIEWING CREDIT LINES OR LOAN APPLICATIONS ESTABLISHED CUSTOMERS 123 100.0 4.9 42.3 52.8 0.0 0.0 NEW CUSTOMFRS 121 100.0 43.0 37.2 19.8 0.0 0.0 LOCAL 122 100.0 5.7 41.0 53.3 0.0 0.0 122 100.0 29.5 28.7 0.0 0.0 SERVICF AREA CUSTOMERS NONLOCAL SERVICE AREA CUSTOMERS 1/ SURVEY OF LFNDING PRACTICES AS nF MAY 15, 1969. AT 124 LARGE 41.8 BANKS REPORTING IN THE FEDERAL RESERVE QUARTERLY INTEREST RATE SURVEY *"T rOR ;IJlTATION OR PUBLICATION TABLE 1 ANSWERING QUESTION BANKS PCT MUCH FIRMER POLICY BANKS PAGE 02 (CONTINUED) PCT MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY BANKS BANKS BANKS PCT PCT PCT MUCH EASIEA POLICY BANKS PCT FACTORS RELATING TO APPLICANT 2/ VALUE AS DEPOSITOR OR SOURCE OF COLLATERAL BUSINESS 122 100.0 32.0 43 35.2 40 32.8 0.0 123 100.0 35.8 44 35.8 35 28.4 0.0 100.0 16.4 34.4 49.2 0.0 0.0 BALANCES 100.0 10.7 17.2 72.1 0.0 0.0 ENFORCEMENT OF BALANCE REQUIREMENTS 100.0 17.2 25.4 57.4 0.0 0.0 100.0 44.3 18.9 36.0 0.8 0.0 INTENDED LENDING USE OF THE LOAN TO "NONCAPTIVE" FINANCE COMPANIES TERMS AND CONDITIONS: INTEREST RATES CHARGED COMPENSATING ESTABLISHING OR SUPPORTING NEW OR LARGER CREDIT LINES ANSWERING QUESTION BANKS PCT CONSIDERABLY LESS WILLING BANKS PCT MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE WILLING BANKS BANKS BANKS PCT PCT PCT WILLINGNESS TO MAKF OTHER TYPFS OF LOANS 123 100.0 28 22.8 51 41.5 44 35.7 0.0 122 100.0 2 1.6 21 17.2 97 79.6 1.6 121 100.0 20 16.5 36 29.8 64 52.9 0.8 120 100.0 25 20.8 44 36.7 51 42.5 0.0 MORTGAGE LOANS 121 100.0 27 22.3 48 39.7 46 38.0 0.0 PARTICIPATION LOANS WITH CORRESPONDENT BANKS 122 100.0 9.0 36 29.5 75 61.5 0 0.0 120 100.0 13.3 32 26.7 72 60.0 0 0.0 TFRM LOANS TO BUSINESSES CONSUMER INSTALMENT LOANS SINGLE FAMILY MORTGAGE LOANS MULTI-FAMILY MORTGAGF LOANS ALL OTHFR LOANS TO BROKERS 2/ FOR THESE FAC IRS, FIRMER MEANS THE FACTORS WERE CONSIDERED MORE IMPORTANT IN MAKING CREDIT REQUESTS, AND EASIFR MEANS THEY WERE LESS IMPORTANT. DECISIONS FOR APPROVING CONSIDERABLY MORE WILLING BANKS PCT NOT FOR QUOTATION OR PUBLIraTION COMPARISON TABLE 2 PAGE 03 OF QUARTERLY CHANGES IN BANK LENDING PRACTICES AT BANKS GROUPED BY SIZE OF TOTAL DEPOSITS 1/ (STATUS OF POLICY ON MAY 15, 1969. COMPARED TO THREE MONTHS EARLIER) (NUMBER IN BANKS IN EACH COLUMN AS PER CENT OF TOTAL BANKS ANSWERING QUESTION) SIZE TOTAL $1 & OVER UNDER $1 OF BANK MUCH STRONGER $1 & OVER UNDER $1 -- TOTAL DEPOSITS MODERATELY STRONGER $1 & OVER UNDER $1 IN BILLIONS ESSENTIALLY UNCHANGED MODERATELY WEAKER $1 & OVER $1 E OVER UNDER $1 UNDER $1 MUCH WEAKER $1 E OVER UNDER L$ STRFNGTH OF DEMAND FOR CCMMFRCIAL AND INDUSTRIAL LOANS (AFTER ALLOWANCF FOR BANK'S USUAL SEASONAL VARIATION) COMPARED TO THRFF MONTHS AGO 100 100 4 3 ANTICIPATED DEMAND 100 100 4 5 IN NFXT 3 MONTHS TOTAL $1 & OVER LENDING TO NONFINANCIAL UNDER $1 MUCH FIRMER $1 & OVER UNDER $1 MODERATELY FIRMER ESSENTIALLY UNCHANGED MODERATELY WEAKER $1 & OVER $1 C OVER $1 & OVER UNDER $1 UNDER ' $1 UNDER $1 MUCH WEAKER $1 & OVER BUSINESSFS TFRMS AND CONDITIONS: 100 100 COMPENSATING OR SUPPORTING BALANCES 100 100 STANDARDS nF CREDIT WORTHINFSS 100 100 100 100 ESTABLISHED CUSTOMERS 100 100 NEW CUSTOMERS 100 100 100 100 100 100 INTEREST RATES MATURITY REVIEWING LOCAL CHARGED OF TERM LOANS CREDIT LINES OR LOAN APPLICATIONS SERVICF AREA CUSTOMERS NONLOCAL SERVICE ARFA CUSTOMERS 46 LARGE BANKS (DEPOSITS OF $1 BILLION OR MORE) AND 1/ SURVEY rF LENDING PRACTICES AT $1 RILLION) REPORTING IN THE FFOERAL RESFRVE QUARTFRLY INTEREST RATE SURVEY AS OF 29 28 78 SMALL BANKS (I DEPOSITS OF LESS THAN MAY 15, 1969. UNDER $1 ,1T crq 3TV~TTIT 'IN R PtLILI C TIn TABLF 2 (CONTINUFD) SIZE NUMBER ANSWERING QUESTION $1 & OVER FACTORS UNDER $1 OF BANK MUCH FIRMER POLICY $1 & OVER UNDER $I PAGE 04 -TOTAL DEPOSITS IN BILLIONS MODERATELY ESSENTIALLY MODERATELY FIRMER UNCHANGED EASIER POLICY POLICY POLICY $1 & OVFR UNDER $I $1 C OVER UNDER $1 $1 E OVER UNDER $1 RELATING TO APPLICANT 2/ VALUF AS DEPOSITOR OR SOURCE OF COLLATERAL BUSINFSS 1100 100 33 36 31 34 0 100 100 33 38 30 27 0 $1 & OVER UNDER $1 0 INTENDED USF OF THE LOAN MUCH EASIER POLICY 0 LENDING TERMS TO "NONCAPTIVE" FINANCE COMPANIES AND CONDITIONS: INTEREST RATFS CHARGED COMPENSATING OR SUPPORTING BALANCES ENFORCEMENT FSTABLISHING OF BALANCE REQUIREMENTS NEW OR LARGER CREDIT LINES NUMBER ANSWERING QUESTION $1 & OVFR WILLINGNESS TO MAKE OTHER TYPES UNDER $1 CONSIDERABLY LESS WILLING $1 E OVER UNDER $1 MODERATELY LESS WILLING ESSENTIALLY UNCHANGED $1 G OVER $1 & OVER UNDER $1 UNDER $1 MODERATELY MORE WILLING $1 & OVER UNDER $1 OF LOANS TERM LOANS TO BUSINFSSES CONSUMER INSTALMENT LOANS SINGLE FAMILY MORTGAGE LOANS MULTI-FAMILY MORTGAGE LOANS ALL OTHER MORTGAGE LOANS PARTICIPATION LOANS WITH CORRESPONDENT BANKS LOANS '/ TO ROKERS 100 100 100 100 FOR THESF FACTORS, FIRMER MEANS THE FACTORS AND EASIER MEANS THEY WERE CREDIT REQUEST, WERE CONSIDERED MORE LESS IMPORTANT. IMPORTANT IN MAKING DECISIONS FOR APPROVING CONSIDERABLY MORE WILLING $1 & OVER UNDER $1 TABLE 2-A NET RESPONSES OF BANKS IN LENDING PRACTICES SURVEYS (In per cent) May 1967 Nov. 1967 Feb. 1968 May 1968 Aug. 1968 12.0 44.4 20.2 63.2 18.8 71.2 -8.0 50.0 64.8 66.4 -2.4 69.8 Strength of loan demand-' (compared to 3 months ago) Anticipated demand in next 3 months Aug. 1967 Nov. 1968 21.6 20.8 30.4 25.0 8.9 12.1 34.4 16.1 7.3 1.6 93.6 -0.8 10.5 2.5 11.6 28.0 64.8 30.0 56.9 -5.6 -5.6 -5.6 May 1969 25.6 - Feb. 1969 54.4 60.0 20.8 49.2 41.8 91.0 75.6 41.4 42.3 LENDING TO NONFINANCIAL BUSINESSES -2 Terms and Conditions Interest rates charged 1.5 9.5 3.1 Compensating or supporting balances Standards of credit worthiness Maturity of term loans 12.0 5.6 -27.2 56.8 10.4 32.8 32.8 4.8 1.6 86.2 64.3 32.8 30.3 10.6 -1.6 6.4 -4.1 15.4 32.5 61.7 30.9 49.5 47.2 80.2 46.7 71.3 16.0 6.4 58.6 54.5 67.2 71.6 -26.4 2.4 3.2 4.8 53.3 50.8 27.9 42.6 62.4 - 0.8 -15.3 - 3.3 4.1 1.7 48.8 Reviewing Credit Lines Established customers New customers Local service area customers Non-local service area customers 14.2 1.6 23.1 16.8 12.1 4.0 0.8 16.1 6.4 21.6 6.5 18.9 6.3 -13.4 25.6 10.4 20.0 14.4 19.2 12.0 54.4 44.4 12.8 8.1 -14.2 2.4 4.8 - 5.6 6.4 9.6 14.4 13.7 10.4 17.6 14.4 22.4 5.6 12.8 7.2 60.5 25.0 32.3 53.2 2.4 2.4 8.1 -21.5 -31.2 -53.2 -17.0 -28.3 6.4 -16.1 - 8.2 9.0 9.8 11.2 -16.1 4.1 14.0 - 4.0 -22.6 - 4.9 7.4 49.6 -0.8 32.0 36.4 43.4 -24.2 -13.8 - 6.4 1.6 - 4.8 Factors Relating to Applicant (Net percentage indicating more important) Value of depositor as source of business intended use of loan LENDING TO NONCAPTIVE FINANCE COMPANIES2 / Terms and Conditions Interest rates charged Compensating or supporting balances Enforcement of balance requirements Establishing new or larger credit lines 11.2 15.3 22.9 29.5 54.9 WILLINGNESS TO MAKE OTHER LOANS- Term loans to businesses Consumer instalment loans Single-family mortgage loans Multi-family mortgage loans All other mortgage loans Participation loans with correspondent banks Loans to brokers 14.0 3.2 8.8 1.6 16.0 23.4 4.8 -11.3 -14.1 8.2 3.4 1.6 6.5 -1.6 42.5 64.3 17.2 45.5 57.5 62.0 18.7 34.2 38.4 40.0 4.2 30.8 40.1 1/ Per cent of banks reporting stronger loan demand minus per cent of banks reporting weaker loan demand. Positive number indicates net stronger loan demand, negative number indicates net weaker loan demand. 2/ Per cent of banks reporting firmer lending policies minus per cent of banks reporting weaker lending policies. Positive number indicates net firmer lending policies, negative number indicates net easier lending policies. 3/ Per cent of banks reporting less willingness to make loans minus per cent of banks more willing to make loans. Positive number indicates less willingness, negative number indicates more willingness. NOTE: 133 banks participated in the February 1967 Survey; 125 banks have participated in the surveys since that time.