Federal Reserve reports that healing of credit system was not everywhere

According to the report released by the Federal Reserve the financial system purportedly continued its pace towards healing from credit crisis. The survey polled senior bank executives who reported an increased demand for commercial real estate loans even though there was a significant damage caused to residential housing markets where demand for mortgages declined.

But banks have been cautious about lending and consumers wary of piling on debt, and the data showed there was still some ways to go before credit conditions return to normal.

Further the survey also showed that there were some gains in the need to borrow which is considered as a sign of that businesses may soon pick up investment while consumers will increase their spending.

Nearly 27% of the polled said there was increased loan demand by large companies, while the appetite for loans from smaller firms rose 10%.

Demand from consumers for credit was flat except for a slight rise in requests for auto loans, although the willingness of banks to extend loans to consumers hit the highest level since 1994.

The report showed a slide in requests for home loans, as analysts had expected, given the depressed state of the U.S. housing market. Not only were standards tight, but 34 percent of banks observed weaker demand.