From the fourth quarter Phoenix Management "Lending Climate in America" Survey, results show a changing lending environment. For the first time since Q4 2010, more lenders expect their financial institution to tighten their loan structures than relax them, although the majority of lenders still expect to maintain their current loan structure. When asked whether their financial institution planned to tighten, relax, or maintain their loan structures, thirteen percent of respondents expect to tighten their loan structure while eight percent expect to relax compared to five and eleven percent in the prior quarter, respectively. This shift seems to indicate a more cautious credit outlook than we have seen in four years.
 
Lenders have also shown a change in regards to their financial institution’s plans to reduce, maintain or increase their interest rate spreads and fee structures on similar credit quality loans. Twenty-two percent of lenders believe their financial institution will increase interest rate spreads, which is a nineteen percentage point increase from the previous quarter while fourteen percent of lenders expect their financial institution to reduce interest rate spreads, a seven percentage point decline from the prior quarter. A more cautious credit outlook, as evidenced by the shift towards tighter loan structures, combined with an expectation towards higher interest rate spreads may indicate a less attractive market for borrowers going forward.
 
"It appears as though lenders are beginning to moderate the aggressive structure and pricing that has been rampant over the past few years. It will be interesting to see if this comes to fruition, and if so, whether it is across the board, or limited to marginal credits," says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix.
 
To see the full results of Phoenix’s “Lending Climate in America” Survey, please visit http://www.phoenixmanagement.com/survey/