The results of a new survey released today by the Federal Reserve confirms what many people looking to buy or refinance already know — it’s hard to get approved for a loan.

The Fed’s July 2008 Senior Loan Officer Opinion Survey, which covered 52 domestic banks and 21 U.S. branches and agencies of foreign banks, found that 75 percent of those banks had tightened lending standards for prime loans since the previous survey, in April. Standards were tightened even more for “nontraditional” loans — 85 percent of banks that originate that type of loan said they had tightened standards on those loans. And six out of seven banks that originate subprime loans said they had tightened lending standards on those loans in the last three months.

The outlook for the remainder of the year isn’t much friendlier for easy financing. About 45 percent of loan officers from domestic banks said they expected their banks to tighten lending standards on prime home loans in the second half of they year, and about 65 percent said they expected standards on nontraditional and subprime loans to continue to tighten during the same time period.

It’s good that banks are adopting more stringent lending guidelines than the virtually nonexistent ones they employed with the 2005 to 2007 vintage mortgages —  which turned out to be highly susceptible to foreclosure. But could the banks be overreacting with these tighter lending standards and thereby prolonging the housing slump? Or is this exactly what the market needs to ensure that home prices stay grounded in the reality of what homebuyers can truly afford?