The Federal Reserve plans to loosen capital requirements for US banks in an effort to stimulate mortgage lending, according to a top official. This regulatory shift aims to encourage banks to increase their home loan activity by reducing the capital they must hold against mortgage assets.

The move comes as the central bank seeks to address housing market challenges and support economic growth. By easing restrictions, regulators hope to make it more attractive for banks to originate mortgages, potentially increasing credit availability for homebuyers. The timing suggests policymakers are concerned about lending conditions in the housing sector.

This policy adjustment represents a significant shift in banking regulation, potentially reversing post-2008 financial crisis measures. The Fed's decision could have far-reaching implications for both the banking industry and prospective homeowners, as increased lending capacity may lead to more competitive mortgage terms and expanded access to home financing.