And, to my view, the creditconstraint channel provides a more credible link between house prices and consumer spending than does mortgage-equity withdrawal, a story about which I have previously expressed serious doubts (Mishkin, 2007b). Another significant risk to the outlook is that lending standards could tighten more than expected not only for mortgages but for other types of credit as well.
As I have noted, the January 2008 Senior Loan Officer Opinion Survey highlighted the fact that many banks are tightening lending standards and terms in a number of credit markets. At the same time, capital at some banks has come under pressure, as institutions have been forced to bring some loans and other securities back onto their own balance sheets.