What early mortgage feedback has been like for Basel

Recent discussions regarding the Basel III Endgame capital rules are hitting a critical phase. While these regulations primarily target large banks, they will have a significant trickle-down effect on your ability to offer financing. The proposed rules require banks to hold more capital against certain types of loans. This change makes it more expensive for banks to provide 'warehouse lines' to non-bank lenders. These non-bank lenders are often the ones providing the point-of-sale and consumer credit products you use in your stores and clinics. If these rules pass as currently written, expect a tighter credit market. Non-bank lenders may see their own borrowing costs rise, which means they will likely pass those costs on to you or your customers. You might see higher merchant fees, stricter credit approvals for your customers, or fewer promotional '0% interest' offers available. The feedback from the industry suggests that regulators may need to soften these requirements to avoid a major contraction in available consumer credit. Retailers should stay alert to how their specific lending partners are being capitalized as these rules finalize.

Source: American Banker — Top News

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