A survey carried out by the Central Bank has found that banks tightened up on lending for mortgages in the second quarter of this year, while lending standards for businesses remained unchanged from the first quarter.
Tighter credit standards usually mean higher interest rates, or more restrictive terms and conditions for loans.
According to the Central Bank, the five Irish banks which took part in the survey reported that demand for credit from firms and households weakened in all categories during the three months.
In contrast to previous surveys, banks found it more difficult to gain access to funds on international markets. The Central Bank said Irish banks saw little change in the situation in the third quarter of this year.
The Irish survey feeds into a euro zone survey compiled by the European Central Bank, which showed that more banks tightened their lending rules in the second quarter, though mortgage lending showed a strong increase in June.
In its survey of 120 banks, the ECB said a net 11% reported having tightened credit standards for businesses, up sharply from a net 3% in the first quarter of 2010. The bank's own forecast for the second quarter was for a slight improvement to 2%.
Loans to households were slightly less affected, with a net 10% of banks saying they had tightened conditions, the same level as in the first quarter of the year.
A net result means that in the first case, 11% more banks said they had tightened standards than those that left conditions unchanged or loosened them.
Commercial banks pointed to a deterioration of their balance sheets and access to wholesale funding as factors behind the tighter lending standards, while they felt credit risks were better and companies' economic conditions had improved, the ECB said.
