Smaller banks and mortgage lenders reported tighter lending standards on mortgage loans over the previous three months, according to the October 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.
It marks a reversal from the slight net easing reported in the previous survey conducted in July.
The tightening of underwriting standards on prime mortgage was largely tied to smaller banking institutions, while larger banks reported little change on such mortgages.
Additionally, more banks reported that underwriting standards for home equity lines of credit had tightened, likely because house values continue to be under pressure.
And a modest net fraction of banks reported weaker demand for both prime and nontraditional mortgages used to purchase homes.
Those too look to be slowing, so 2011 may not be the best of years for the mortgage industry.