From the second quarter Phoenix Management “Lending Climate in America” Survey, results show more lenders anticipate spreads to decrease.
Fifty-eight percent of respondents (versus 65% in the previous quarter) anticipate maintaining lending spreads at their current levels. The percentage of lenders expecting to reduce their current interest rate spreads increased nine percentage points, representing 30% of total responses this quarter.
This number is up from 11% just six months ago, and demonstrates the continued pricing compression in the market. Thirteen percent of lenders anticipate increasing their interest rate spreads in the next six months, which was flat compared to the first quarter of 2013.
In addition, lenders have projected increased volatility in the Healthcare sector. When asked to identify three industries that will experience the most volatility in the next six months, 59% of lenders agree that Healthcare and Social Assistance will experience the greatest volatility, an increase of twenty-eight percentage points from the prior quarter’s survey.
Retail Trade followed next with 51% of those polled thinking the Retail Industry could experience volatility over the next six months. The Construction industry garnered 32% of the vote, a slight uptick in the volatility rankings after coming in at 26% in the prior quarter.
“Despite recent robustness in the credit markets, lenders seem to be moderating their optimism with regard to domestic lending over the next six months, and economic growth in the longer term” says Michael Jacoby, Phoenix managing director and shareholder. “These positions stand in contrast to lenders expectations of further relaxation to loan structures and further reduction in interest rate spreads, which would seem to indicate it should remain a borrower’s market for at least the balance of 2013.”
To see the full results of Phoenix’s “Lending Climate in America” Survey, please visit http://www.phoenixmanagement.com/survey/