FRANKFURT - Euro zone banks expect demand for corporate and household loans to increase further in the third quarter with credit standards also easing, the European Central Bank said in a quarterly survey of the bloc's top banks.

Buying 2.5 trillion euros (£2.2 trillion) worth of public and private bonds over the past three years, the ECB has pushed borrowing costs to record low levels, hoping to stimulate borrowing and spending, all with the ultimate aim of boosting inflation.

Although the scheme worked more slowly than expected, household and corporate lending are both near post-crisis highs, so the ECB agreed last month to wind down the bond purchases, satisfied that inflation is finally moving back towards its target of just under 2 percent.

In the second quarter, banks saw increased demand for corporate, housing and consumer loans and said credit standards -- internal guidelines or loan approval criteria -- also eased for all three categories, the ECB said.

Its comments were based on a survey of 149 lenders.

"Banks’ overall terms and conditions on new loans continued to ease across all loan categories in the second quarter of 2018, driven mainly by a narrowing of margins on average loans," the ECBsaid.

It added that competitive pressures and risk perceptions contributed to an easing of creditstandards in the second quarter, while banks' risk tolerance, their cost of funding and balance sheet constraints had a broadly neutral impact.

(Reporting by Balazs Koranyi; editing by John Stonestreet)

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