Most people who apply for a home loan can still get one, although the process is harder and takes longer.
The Reserve Bank says lenders are competing vigorously to attract lower-risk borrowers as fewer people apply for mortgages.
Housing credit conditions are tighter than they have been for some time following improvements in lending policies and practices in recent years, the central bank said in its latest assessment of the economy.
Lenders have increased their scrutiny of would-be borrowers' expenses over the past year, but the RBA concluded the further tightening in lending standards was not the main explanation for a recent decline in housing credit growth.
It pointed to reduced demand for housing loans, particularly from investors put off by the fall in house prices in the major markets.
In Friday's Statement on Monetary Policy, the RBA said its liaison with the major banks and mortgage brokers indicated they had been receiving significantly fewer loan applications over the past year or more.
"Liaison also reported that most people who apply for a housing loan can still obtain one, though they have to provide more documentation, answer more questions and wait a few days longer to be approved."
It now typically took about one week for an application to be approved.
Mortgage brokers reported lenders were no longer making as many exceptions to their credit policies as they did in the past.
Brokers also suggested the increased public scrutiny of the banking royal commission may have led some individual loan assessors to apply stricter criteria than that required by official lending requirements.
Banks reported that while loan assessors were referring more approvals to credit officers, the final approval rate remained high.
Some people who would have normally obtained a loan from the banks were borrowing from non-bank lenders.
The RBA said lenders were competing vigorously to attract borrowers with high-quality credit profiles who were applying for owner-occupier principal-and-interest loans.
"In particular, owner-occupiers with low loan-to-valuation ratios who can demonstrate the ability to service their loan are being offered quite low interest rates.
"Liaison also suggests that borrowers with these characteristics who have had a home loan for some time and want to refinance can often obtain a lower interest rate from another institution or convince their existing lender to lower the rate that they are paying."