US banks report best loan demand in 2 years, Fed survey shows

(Reuters) -U.S. banks reported unchanged demand for commercial and industrial loans in the second quarter, the first time in two years that demand did not weaken, a Federal Reserve survey of senior loan officers published on Monday showed.     Fed officials had the survey results in hand last week when they left the U.S. central bank's policy rate in the 5.25%-5.50% range while flagging a possible interest-rate cut in September.

The net share of banks reporting tighter standards for C&I loans fell to the lowest in two years for all sizes of borrowers, but they still outnumbered banks reporting loosening requirements, the survey showed.

A net 0% of banks reported weaker C&I loan demand from firms of all sizes, the first time in two years that such banks did not outnumber those reporting stronger demand, the survey showed.

Credit conditions for households are similarly stabilizing and demand for most types of consumer loans is improving, the survey showed.

Lending standards for most home loan categories and auto loans were unchanged in the second quarter, after tightening over the last two years, it added.

Demand in most categories of mortgage loans and for credit card and other consumer loans weakened, but less so than before, the data showed.

For the first time in nearly two years, the share of banks reporting stronger demand for credit card loans exceeded the share with weaker demand.

(Reporting by Ann Saphir; Editing by Richard Chang)