Financial
conditions in the commercial real estate (CRE) sector were still generally
strained amid elevated vacancy and delinquency rates. However, prices
for CRE properties continued to increase in the third quarter, and
issuance of commercial mortgage-backed securities remained at a solid pace in
the current quarter.
Residential
mortgage rates declined modestly over the intermeeting period,
largely in line with the decline in MBS yields. Refinancing expanded a
bit further in October and November. House prices continued to
increase despite a rise in the proportion of properties sold through
foreclosures or short sales. The share of existing mortgages that were seriously
delinquent fell in the third quarter but remained elevated.
Consumer
credit continued to expand briskly in September, led by sizable
increases in auto and student loans. Revolving credit decreased in
September but was little changed, on net, over the previous few months.
Issuance of consumer asset-backed securities continued to rise at a strong
pace. Delinquency rates on consumer credit generally remained low, with
the notable exception of student loans.
Bank credit was about flat, on balance, over October and November. Growth in
C&I loans and consumer loans was offset by a decline in banks' residential
real estate loans. The November Survey of Terms of Business Lending
indicated some easing in loan pricing and terms.
M2
growth was rapid in October but slowed in November. Liquid deposits
continued to grow at a strong pace, as yields available on alternative
money market instruments remained low. Reserves increased over the intermeeting
period, in part because of the settlement of the ongoing MBS purchases
announced at the September FOMC meeting
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