now that the rates have risen, the banks will lend

In theory banks lend to make money.  When rates are higher, they lend more.

Now examine these two graphs.  The first chart is from marketwatch.  It shows the 10 year treasury over the last 5 years.  The rates had steadily declined till recently.

 

 

rates

 

 

 

 

 

 

 

 

 

The next chart examines total debt payment / income and debt / income.   This chart  should make it clear that banks did in fact tighten their lending standards as record low interest rates were being set.

deleverage

 

 

 

 

 

 

 

 

 

The question remains if banks will operate in a converse manner as rates rise…  Ie.  Lend more as rates rise.  Rising rates may cause a greater rise in asset value.

 

D.

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