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Banks tightened lending standards for commercial real estate in Q2 -Fed

WASHINGTON, July 31 (Reuters) - Loan officers at U.S. banks reported tightening lending standards on commercial real estate loans while terms for business loans remained largely unchanged, the Federal Reserve reported on Monday in a quarterly survey.

The officers surveyed also reported a weakening in demand for both types of loans in the second quarter.

"A moderate net fraction of banks reported tightening standards for construction and land development loans and loans secured by multifamily residential properties" in commercial real estate, the U.S. central bank said in its survey.

A number of Fed policymakers have warned that a run-up in commercial real estate prices could intensify any future economic downturn. The Fed put a bigger emphasis this year on commercial real estate in its annual "stress tests" to determine how well big banks could weather financial turmoil.

Some banks also reported a tightening in auto and credit card loan standards, with demand also weakening in that category.

The Fed surveyed loan officers at 76 domestic banks and 22 U.S. branches and agencies of foreign banks. (Reporting by Lindsay Dunsmuir; Editing by Paul Simao)