WASHINGTON - Demand for credit was mixed in November, but higher rates turned off borrowers in some parts of the country, the Federal Reserve Board said Wednesday.

Demand for commercial and industrial loans was down or flat in St. Louis, Dallas, New York, Philadelphia, and Cleveland, according to the Beige Book, a periodic report on economic conditions compiled by the 12 Federal Reserve Banks.

Two Fed banks - Boston and Minneapolis - did not describe loan demand, while the Atlanta, Chicago, Kansas City, Mo., Richmond, Va., and San Francisco districts reported strong demand by businesses.

On consumer lending, most districts said demand continued "on an upward trend," but noted that some bankers are concerned higher rates may cause borrowers to pull back.

"Loan demand has softened in response to rate increases," according to the Federal Reserve Bank of Cleveland. "Competition for borrowers is stiff." The Cleveland, St. Louis, and San Francisco districts all said interest rate margins are narrowing.

The New York Fed said interest rates climbed on both deposits and loans while the Kansas City Fed said the cost of credit rose.

The Fed's monetary policymaking arm - the Federal Open Market Committee - considers the Beige Book when setting interest rates. The committee's next meeting is scheduled for Dec. 21.

At its most recent meeting on Nov. 16, the committee raised both the federal funds and the discount rate by 25 basis points, to 5.5% and 5%, respectively. It was the third quarter-point hike this year.

"The last rate increase was certainly it for the year," said Wayne Ayers, chief economist at FleetBoston Financial Corp. The Fed will not see enough data before the February meeting to change the outlook and it will "remain on the sidelines" until at least March, he added.

The Open Market Committee, which meets about every six weeks, raised the federal funds rate for the first time this year in June, but left the discount rate unchanged. In September, both rates were increased. In October, the committee decided not to touch either rate.

Mortgage lending and refinancings continued to drop in much of the nation, according to the Beige Book.

Credit underwriting standards held steady in November.Consumer credit quality improved in the Atlanta, Chicago, and New York districts. Business borrowers' credit quality was level across most of the country, though the Dallas Fed reported a rise in commercial loan delinquencies.

The commercial real estate market remained solid in November with office vacancies and rents holding firm. Construction activity remained robust in much of the country.

The Boston Fed focused on the insurance industry, saying strong competition "has left little room for increases in premiums."

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