In 2011, the volume of home lending dropped 10 percent, hitting the lowest level since 1995, Reuters reported.
The Federal Financial Institutions Examination Council, a group of U.S. regulators, published data on Tuesday showing that 7.1 million home loans were made in 2011, down from 7.9 million the previous year.
Refinancing of home loans dropped 13 percent during the year and new mortgage loans fell 5 percent, the agency said.
The U.S. government now guarantees most new mortgages and is trying to make refinancing easier for homeowners. Despite low interest rates, the Fed said on Tuesday that banks are requiring higher credit scores to qualify for loans, which has tightened lending.
The median score for home buyers has risen about 40 points since the end of 2006, it said.