US banks cut back their lending

Problems in the mortgage market have made it difficult to sell houses

US banks have tightened up even more on lending, despite the Wall Street rescue deal designed to encourage the renewal of normal lending practices.

A quarterly Federal Reserve survey in October found 70% of banks tightened standards on prime mortgages while 60% had done so with credit card debt.

Some 95% of banks had tightened their standards for providing credit to large and medium-sized businesses.

The survey covered 52 institutions that account for 78% of real estate loans.

The continued credit contraction comes despite the US government spending $700bn (£442bn) on a rescue package to ease the stricken financial sector's credit paralysis.