Tougher to get a job or a loan? You decide

May 10, 2013

Charting how tough it is to get a loan or a job

Review of the week’s economic indicators

MarketWatch Slide Shows

Retirement
• 15 ways to live well in a cheapskate retirement
• 10 best states to retire in
• The 10 worst states for retirees
• The 10 best U.S. cities for retirees

Jesse Varner/Wikimedia

REal Estate
• The 10 best places to live in the U.S.
• 10 best U.S. cities for real-estate investors
• 10 most unhappy states in the U.S.
• The world’s 10 most expensive cities

Leisure
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• Nine beers America has quit drinking
• Top 10 cities to live in if you like bars
• The 10 best U.S. cities if you like restaurants

WORKPLACE
• 13 companies everyone wants to work for
• 7 office gadgets headed for the graveyard
• 10 companies with the worst reputations
• 10 U.S. companies with the best reputations

Cars
• 9 cars Americans drive the longest
• 6 top cars for fuel efficiency, and 2 guzzlers
• 10 most versatile cars under $20,000
• 10 of the fastest super cars in the world

Entertainment
• Andy Griffith’s most popular roles
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• The 10 best rock-and-roll movies ever made

TRAVEL
• 10 best travel spots — if money’s no object
• Tourists flock to Kyrgyzstan and Qatar — really
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Technology
• The 8 biggest product flops of 2012
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CONSUMER
• 9 retailers with the worst customer service
• 5 things you can’t resell

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By Steve Goldstein, MarketWatch

Business loan standards

The latest senior loan officer survey from the Federal Reserve shows that banks are becoming more willing to lend to firms big and small. “C&I” means commercial and industrial loans, and negative readings indicate that banks, on net, are becoming looser rather than stricter in their loan criteria.

— Steve Goldstein

Business loan demand

Meanwhile, businesses increasingly want loans, but not to a huge degree, the senior loan officer survey shows. That squares with other data showing businesses acting cautiously in the wake of tepid demand.

Still tough on mortgage applicants

The red line shows that ever so slightly, banks are making it easier to get mortgages. But not by much. Meanwhile, demand for mortgages (shown in blue) is rising. A separate report from the Mortgage Bankers Association showed demand for mortgage applications at three-year highs. If you’re lucky enough to get a mortgage, why not, with interest rates so low and prices by historical standards pretty reasonable.

In a largely overlooked speech, Federal Reserve Gov. Elizabeth Duke said originations for borrowers with credit scores between 620 and 680 have dropped by 90% between 2007 and 2012 — and even by 30% for borrowers with credit scores above 780. The median credit score on these originations rose from 730 in 2007 to 770 in 2013.

Banks are fearful of so-called “putback” risk, or in layman’s terms, that they will be forced to buy back bad loans, she said. But the economic outlook and the opportunity cost also were reasons that lenders cited.

House prices climbing

U.S. home prices have climbed every month for the last 13 months, CoreLogic says. Low interest rates, a slowly improving jobs market, and tight inventories have all helped to boost prices — in most markets that is. Chicago is an example of where distressed properties coming onto the market have kept a lid on prices.

Competition for jobs

While there’s undeniable progress, it’s still tougher to find a job now than before the recession. The number of job seekers per opening was 3.1 in March, above the 1.8 or so before the recession started.

Subdued hiring rate

The good story on the jobs front is the lack of layoffs, shown in jobless claims data being at a five-year low. But the rate of hiring has only minimally got better since the recession. The outlook for better-skilled positions, like in professional and business services, is better, though even there it’s restrained.

Chinese trade

Chinese exports have rebounded, according to the latest data from the country. But wait — the mainland exports more to Hong Kong than the United States? That can’t be right, can it? There is some evidence that some firms try to arbitrage the difference between the offshore and onshore renminbi markets, and seeing Hong Kong exports up 57% year-on-year in April suggests as much. But exports to major regions like the U.S., the euro zone and Japan did improve in April from March levels.

Over-the-counter derivatives

The latest data on over-the-counter derivatives (that is, derivatives that don’t trade on exchanges) was released by the Bank for International Settlements. The chart here shows the value of replacing contracts at current prices (the red line), and the blue bars show what’s left when netting agreements are factored in. At $3.6 trillion, that’s still a lot.

Breaking down the OTC derivatives market

Interest rate derivatives account for about three-quarters of OTC activity. Credit-default swaps, while a part of the market that’s received headlines due to the euro-zone debt crisis, actually play a comparatively small role.