If anyone thinks that a tight credit environment is holding the mortgage market back, then a new survey from the Federal Reserve shows there may be some light at the end of the tunnel.

According to the July 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices, released Monday by the Federal Reserve, banks reported having eased lending standards for a number of categories of residential mortgage loans over the past three months.

The Fed survey results echo a recent Capital Economics report, which showed that credit conditions are gradually loosening, and that a loosening of credit conditions will help the sluggish recovery.

According to the Fed survey, the easing was coming not from government-insured or subprime mortgages, but rather from jumbo residential mortgages that conform to the Consumer Financial Protection Bureau's qualified mortgage rules.

The Fed survey showed that “modest net fractions” of banks indicated that they had eased underwriting standards on residential mortgages, excluding government-insured and subprime mortgages. 

Additionally, “moderate fractions” of domestic banks reported that lending standards for all five categories included in the survey (GSE-eligible mortgages, government-insured mortgages, jumbo mortgages, subprime mortgages, and home equity lines of credit) remained at least somewhat tighter than the midpoints of the ranges that those standards have occupied since 2005.

Meanwhile, the vast majority of banks continued to report that they do not extend home-purchase loans to subprime borrowers.

In fact, of the 66 banks surveyed, only five responded that they wrote loans that they categorized as subprime.

The remaining 61 banks answered “My bank does not originate subprime residential mortgages,” the Fed survey showed.

On the demand side, moderate to large to net fractions of banks reported stronger demand across most categories of home-purchase loans, the Fed survey showed.

Specifically, the survey showed that 43.5% of the survey respondents reported “moderately stronger” demand for GSE-eligible mortgages in the last three months.

On balance, lending standards were reportedly little changed for HELOCs, and demand for such loans strengthened.