Credit standards set by banks on mortgage loans eased in the second quarter of 2015, although demand for financing was found to fallen.

The Bank Lending Survey, published by the Central Bank on Tuesday, also reported a “marginal” decline in the amount of mortgage applications turned down by financial institutions.

The relaxation of credit standards - which refers to internal lending guidelines and loan approval criteria - was a reversal of the situation noted in the first quarter. Their easing has been explained by improved economic sentiment, favourable housing market prospects and the improved “credit worthiness” of perspective borrowers.

“Loan demand from households decreased in respect of lending to households for house purchases...[which was] attributed to the regulatory and fiscal regime of housing markets,” the report said.

Credit standards remained unchanged in the area of consumer lending to households. “The increase in loan demand in respect of consumer credit and other lending was attributed to spending on durable consumer goods as well as higher levels of consumer confidence,” the report said.

It also examines lending patterns to private enterprise and found that in this area, credit standards remained unchanged in the second quarter.

“The share of loan applications from enterprises that were completely rejected has remained unchanged. For the third successive quarter, loan demand from enterprises increased across all five loan categories examined.”

The euro area Bank Lending Survey is completed each quarter and examined credit market conditions.