Builders and home buyers better brace themselves: the credit crunch isn’t going away.

According to the Federal Reserve Board’s quarterly survey on lending practices, which was released yesterday, a majority of senior loan officers at domestic banks around the country expect credit standards for approving commercial real estate loans to become more restrictive for the remainder of 2008 and through the first half of 2009. More than half—58%—said the guidelines for such loans would “tighten somewhat” during the rest of this year; 14% said things would “tighten considerably.”

Things might ease up a little bit, but not much, in 2009; 48% of respondents at domestic banks said they thought standards for commercial real estate loans would “tighten somewhat” in 2009’s first half. Four percent thought rules would “tighten considerably.”

That’s bad news for builders, many of whom are on the ropes financially already. Approximately 80% of domestic banks told the Fed that they had toughened up their commercial real estate lending standards during the past three months.

Based on the Fed data, the prospects for a rebound in home sales seem slim, although this survey was taken in July, before the housing bill passed. Demand is down, with 30% of domestic banks seeing weaker demand for prime-category home loans and 45% reporting lower demand for nonprime mortgages over the last three months. (According to the Fed, nonprime loans would include both subprime mortgages and home loans issued with low or no documentation requirements.) And lending standards continue to tighten. Roughly 75% of domestic banks said they had adopted stricter rules for approving prime mortgages in the last three months.

And it doesn’t sound like they will be relaxing those new guidelines anytime soon. Nearly half—44%—of senior loan officers predicted that credit standards for prime residential real estate mortgages would “tighten somewhat” for the rest of 2008. Nonprime loans received an even less optimistic forecast; 54.5% of respondents said requirements for those loans would “tighten somewhat” while 9.1% predicted standards would “tighten considerably” for such mortgages.

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