WASHINGTON (Reuters) – Banks tightened lending standards for U.S. businesses and households in the third quarter, but the pace of change appeared to ease, and demand for loans fell broadly in a sign of the impact higher interest rates are having on the economy, the Federal Reserve reported on Monday.

The tightening of standards for business loans applied to firms of all sizes, the U.S. central bank said in its latest survey of senior bank lending officers, while consumers faced tighter credit for home and home equity loans, credit cards, and tougher terms on auto loans.

Demand for loans fell broadly, with 60% of banks citing moderately or substantially weaker demand for home mortgages in the third quarter, up significantly from 43% in the second quarter, as the Fed’s aggressive rate increases since March of 2022 continued to bite on the residential housing industry.

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