Loan quality continues to deteriorate nationwide, but after months of consistently pessimistic reports, the Federal Reserve Board on Wednesday found some glimmers of hope.

The central bank's Beige Book, a report on economic activity in its 12 districts, said credit conditions remain tight. But the New York, Richmond, Va., and Kansas City, Mo., districts noted increases in residential real estate lending.

The New York Fed said 63% of bankers reported an increase in the demand for residential mortgages — the biggest jump in more than seven years. These bankers also said refinancing activity is strong. And a banker told the Richmond Fed that demand for refinancing is "hard to keep up with."

Still, the Fed said problems persist. The Federal Reserve Bank of Atlanta said credit remains hard to get amid lower loan demand and uncertain collateral values. Bankers told the Kansas City Fed that their outlook has become more pessimistic since last month.

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