US subprime demand drops, banks tweak norms

Banks tightened lending standards on non-traditional and subprime mortgage loans in the US, according to The July 2007 Senior Loan Officer Opinion Survey on Bank Lending Practices conducted by the Federal Reserve in July.

"With regard to loans to households, a small net fraction of domestic institutions reported having tightened lending standards on prime residential mortgages over the past three months whereas considerable net fractions of these respondents indicated that they had further tightened lending standards on nontraditional and subprime mortgage loans," the survey reported.

The report is based on responses from 53 domestic banks and 20 foreign banking institutions.

"Moderate fractions of domestic banks, on balance, reportedly experienced weaker demand for prime and non-traditional residential mortgages over the past three months, but a notable net fraction of banks reported that they had seen weaker demand for subprime residential mortgages over the same period," the survey said.

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