No hint of credit tightening in Fed survey of bankers By Pedro da Costa WASHINGTON (Reuters) - U.S. financial conditions remained favorable during the second quarter despite the spike in market interest rates, according to the latest Federal Reserve survey of bank senior loan officers. Banks eased lending conditions for commercial and industrial loans, and demand for consumer lending strengthened across the board, including the housing sector. A jump in mortgage rates, a reaction in part to warnings from Fed officials that they may soon begin curtailing the pace of their bond-buying stimulus, has sparked concern that a nascent housing recovery might peter out. Ten-year Treasury note yields, a benchmark for borrowing costs across the American economy, are now hovering around 2.65 percent, up a full percentage point in just three months. There were no signs in the Fed's report on Monday, however, that the higher yields were having a palpable adverse affect on bank loans. "Domestic banks, on balance, reported having eased their lending standards and having experienced stronger demand in most loan categories over the past three months," the report said. In addition, about half of respondents reported stronger demand for commercial real estate lending. Still, some large banks reported weaker demand for commercial and industrial loans. The Fed continues to buy $85 billion in Treasury and mortgage securities per month in an effort to bolster a weak recovery, though it is widely expected to begin paring back such purchases later this year. U.S. gross domestic product grew 1.7 percent in the second quarter. Reporting by Pedro DaCosta; Editing by Leslie Adler