Banks were more tight-fisted when lending money to businesses and households during the last three months as demand for loans dropped, according to a new survey.

Senior loan officers at fifty-two U.S. banks and twenty overseas institutions replied to a survey asking about lending practices for products in various categories, including commercial, real estate, mortgages and credit cards. The October report was released on Tuesday by researchers at the Federal Reserve.

The biggest increase in lending standards domestically came from non-traditional residential loans, with 60 percent reporting tighter standards since the last survey in July. Commercial paper lending standards abroad also rose 60 percent for the biggest gains

Commercial loans

Lending standards were tighter in the U.S. and abroad for Commercial & Industrial loans. Demand for such loans weakened domestically but foreign banks saw little change. Commercial real estate loans were also more difficult to obtain in both regions, with demand diminishing.

Reasons for the tighter standards for C&I loans included an uncertain economic outlook, decreased liquidity in the secondary market, and reduced tolerance for risk. Few expressed concern over the bank's capital or liquidity position.

Almost all domestic and foreign banks that tightened lending standards for C&I loans said a less favorable or more uncertain economic outlook was the reason they did so. Another reason given by large majorities of such banks was decreased liquidity in the secondary market and reduced tolerance for risk. Few said banks's capital or liquidity position contributed to the tighter standards.

Consumer loans

Standards for consumer loans were also more stringent. However credit card loan requirements were little changed. In the home loan sector, various types of loans were affected, including prime, nontraditional and subprime residential mortgages.

Lending standards survey results:

Commercial Paper

- 25 percent report higher standards domestically

- 60 percent report higher standards abroad

Commercial Real Estate

-50 percent report tighter standards domestically

-40 percent report tighter standards abroad

-35 percent report lower demand domestically and abroad

Residential Real Estate

- 40 percent report higher standards for prime mortgages

-60 percent of banks providing non-traditional residential loans reporter tighter standards

-5 of 9 banks providing subprime loans tightened standards

Prime Jumbo Mortgage Loans (greater than $417,000) - Domestic

- 45 percent report volume drop in originations

- 35 percent of respondents say prime jumbo securitizations dropped

Consumer Lending - domestic

- about one-fourth report tighter standards for consumer loans

- about one-fourth report lower demand for consumer loans

- Credit card lending standards little-changed

The report is titled: The October 2007 Senior Loan Officer Opinion Survey on Bank Lending Practices

Mortgage