WASHINGTON -- U.S. banks relaxed credit standards for some types of domestic loans in the first three months of this year as demand grew, but institutions continued to tighten credit to Europe amid the debt crisis there, the Federal Reserve said Monday

The Fed's quarterly survey of senior loan officers at American banks and foreign ones with U.S. operations showed that credit standards, overall, were moderately looser over the first three months of the year compared with the end of last year.

The change among domestic banks was driven by an easing of standards for credit card, auto and other consumer loans and commercial real estate. Standards for home mortgages and business loans were about unchanged despite a pickup in demand, the Fed said.

Though banks didn't make business loans easier to obtain, they did extend more favorable loan terms to those who got them, the Fed said. Most indicated that they "had done so in response to more aggressive competition from other banks or nonbank lenders," the central bank said.

The Fed surveyed 58 domestic lenders and 23 U.S. branches of foreign banks between March 27 and April 10. Easier credit standards can help an economy that, while showing signs of improvement, remains fragile. Gross domestic product, the value of all the goods and services produced in an economy, increased by only 2.2% in the first three months of this year.

Europe's financial turmoil continued to cause banks to tighten credit to that continent's banks and other businesses, though not as severely as in the previous quarter, said the Fed, which asked a special set of questions on European issues.

Domestic banks, however, continued to benefit from European troubles. About two thirds of institutions that compete with European lenders "noted an increase in business as a result of decreased competition from European banks and their affiliates or subsidiaries, a somewhat larger fraction than in January," the Fed said.

Another special set of questions focused on residential real estate lending. About a third of the banks surveyed said they were participating in the Obama administration's refinancing program and "were satisfying most demand." About half, however, said they had "very little participation" in the program, the Fed said.

In addition, banks highlighted a fear that they would be forced by mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) to repurchase troubled loans. They also cited difficulty in processing loan applications in high-volume periods.

-By Alan Zibel and Jeffrey Sparshott, Dow Jones Newswires; 202-862-9263; alan.zibel@dowjones.com