Euro zone banks lowered the bar on mortgage approvals last quarter for the first time in over two years but demand for credit kept falling amid high borrowing costs and a stagnant economy, a European Central bank survey showed on Tuesday.

The ECB has pushed interest rates to record highs to rein in inflation, bringing bank credit growth in the 20 countries that share the euro to a standstill.

While banks were slowly turning less cautious -- at least about extending home loans -- households and companies showed little appetite for taking on fresh debt, the ECB's quarterly Bank Lending Survey showed.

Banks eased their standards for approving loans to households for house purchases in the three months to March and tightened access to corporate credit less than they had expected.

But they still reported a "substantial decline" in demand for credit from companies -- which they did not expect three months earlier -- and a "small decline" for housing loans.