IRISH BANKS said access to wholesale funding may deteriorate in the third quarter, according to the Central Bank, citing the euro region’s lending survey.

“Participating institutions report that access to wholesale funding markets deteriorated across the maturity spectrum during the second quarter of 2010 with the exception of the market for credit risk transfer,” the bank said. “During the third quarter of 2010, access to these markets is expected to deteriorate further or remain unchanged.”

The survey, which questioned the five Irish banks, said credit standards for loans to enterprises were unchanged but loan margins rose and terms and conditions became more restrictive.

Demand for loans from businesses fell in the second quarter. Lending to firms is seen as crucial to economic health.

Consumers also felt the pinch during the three-month period, with credit standards for mortgages tightening during the second quarter of 2010.

They were unchanged for consumer credit and other lending to households.

The survey found loan margins increased in both categories, and mortgages showed reduced loan maturity.

Banks said demand for mortgages and other consumer loans was down during the quarter, which the Central Bank attributed to the declining housing market, falling consumer confidence and reduced spending.

In the wider euro zone, banks said they expect to continue to toughen lending rules in the third quarter. But analysts pointed to the timing of the survey as an important factor and warned against over-interpreting the sentiment at the height of the sovereign credit crisis, which has eased since.