Eurozone banks are tightening lending conditions for both businesses and households even as demand falls and the sovereign debt crisis drags on, the European Central Bank found on Wednesday. In its latest quarterly Bank Lending Survey, the ECB said that a quarter of banks expect to tighten the criteria that businesses must meet to take out loans in the first quarter of the year. Almost as many banks said they would also tighten conditions for loans to households for house purchases. At the same time, demand for such loans both from households and firms has declined, the survey found. The poll was conducted between December 19 and January 9 and so will not fully take into account the unprecedented injection of nearly half a trillion euros ($650 billion) of liquidity into the banking system by the ECB at the end of last year. The data will, however, heighten concerns about a possible credit crunch in the 17 countries that share the euro. Banks already tightened lending conditions substantially in the final quarter of 2011, the ECB survey showed. A net 35 percent of banks did so in the period from October to December, compared with 16 percent in the preceding three months. In the case of mortgage loans, as many as 29 percent of banks said they had tightened conditions in the fourth quarter of 2011, up from 18 percent in the preceding quarter and \"higher than expected,\" the ECB said. \"Similarly to corporate loans, increased cost of market funding and balance sheet constraints were put forward as key driving factors behind these developments,\" it said. Demand for loans by both companies and consumers is on the decrease. Banks reported a \"strong further contraction\" of 27 percent in demand for mortgage loans in the last quarter of the year, compared with 24 percent in the third quarter. \"This was mainly on account of a clear deterioration of housing market prospects and weakening consumer confidence,\" the ECB said. In the case of businesses, the decline was not quite as steep, with demand falling 5.0 percent in the fourth quarter after 8.0 percent in the third. \"This decline was driven by a moderation in the pace of economic activity,\" the ECB explained. Last week, fears of an emerging credit crunch in the eurozone increased as data showed a sharp slowdown in bank lending to the private sector. The ECB calculated in regular monthly data that growth in loans to the private sector slowed substantially to just 1.0 percent in December from 1.7 percent in November. Last month, in a series of special measures, the ECB launched its longest-ever liquidity operations, lending eurozone banks as much as they wanted for a period of three years at super-cheap rates. Banks in the region queued up in their hundreds to borrow 489 billion euros in the first-ever such operation. Nevertheless, there have been concerns that banks are simply hoarding the cash, rather than lending it to businesses and households as the ECB hoped they would, and lenders are parking record amounts of cash in the central bank\'s overnight storage facility.