WASHINGTON (Dow Jones/AP) - U.S. banks have tightened their standards on loans for prime, non-traditional and subprime mortgages, according to a survey released this week.

In its quarterly survey of senior loan officers, the U.S. Federal Reserve also reported demand for bank loans weakened for both businesses and households.

Banks got the survey in early January and their responses were due Jan. 17. The survey was based on responses from 56 domestic banks and 23 foreign banking institutions.

"In the January survey, significant numbers of domestic respondents reported that they had tightened their lending standards on prime, nontraditional and subprime residential mortgages over the past three months," the Fed said.

About 55 percent of domestic respondents indicated they were tightening lending standards, up from 40 percent in October.

Of 39 banks that originated non-traditional residential mortgage loans, about 85 percent reported a tightening of their lending standards on such loans over the past three months, up from 60 percent in October.

Five of the seven banks that originated subprime mortgage loans noted they had tightened their lending standards on such loans, similar to the proportion in October.

About 60 percent indicated demand for prime residential mortgages had weakened over the past three months and 70 percent noted weaker demand for non-traditional and subprime mortgage loans.

Banks were asked about their expectations for delinquencies and charge-offs on loans to businesses and households in 2008. "On balance, the responses indicate that large majorities of domestic and foreign banks expect a deterioration in loan quality in 2008," the Fed said.

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