Residential mortgage lending continued to contract from mid-November through December, according to the Federal Reserve Beige Book, but refinancing activity varied. The Chicago and Richmond Federal Reserve district banks reported "increased refinancing activity, but New York cited widespread declines in refinancing," the Beige Book says. The Fed's periodic report on economic activity also notes that home sales are "sluggish" in most bank districts and inventories of unsold homes remain at historically high levels. "Overall, contacts anticipate that housing markets will remain weak during the first part of 2008," it says. Meanwhile, commercial real estate activity "eased late in the year," demand for CRE loans was mixed, and credit standards have tightened in the past two months, according to the Fed report.

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