Banks borrowed slightly less from the Federal Reserve's emergency lending program over the past week, and reduced their use of other credit programs designed to ease the financial crisis.
The Fed said Thursday that commercial banks averaged $20.8 billion in daily borrowing over the week that ended Wednesday. That's down $1.81 billion from the week that ended Nov. 5, and far less than the $95.38 billion they borrowed a year ago at the height of the credit crisis.
The drop in borrowing followed a slight increase last week _ the first since Sept. 2.
The identities of the financial institutions are not released. They pay just 0.50 percent in interest for the emergency, overnight loans.
Banks also cut their use of a separate program intended to boost the availability of short-term financing crucial for business operations like payroll and supplies. Loss of "commercial paper" financing was a central part of last year's financial crisis.
Under the program, the Fed's holdings of commercial paper averaged $14.4 billion for the week, a drop of $1.25 billion from the previous week. At its peak in late January, the Fed had almost $350 billion of commercial paper.
Down steeply was banks' use of short-term loans from the Fed's "term auction credit" facility, which averaged $109.46 billion _ $29.79 billion less than the previous week.
The limited borrowing shows banks are having a slightly easier time getting short-term loans in private markets.
But the improvement hasn't necessarily translated into better terms for businesses and individuals. For them, the flow of credit remains weak. That's one reason Fed Chairman Ben Bernanke and other economists believe the nascent economic recovery will be slow.
Thursday's report showed a very slight rise in the central bank's purchases of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. Those holdings were valued at an average of $774.83 billion over the past week, up $373 million from the previous week.
The Fed said in September that it would wrap up its effort to buy $1.25 trillion of the securities by the end of March, rather than by the end of this year. The goal of the program is to drive down mortgage rates and prop up the housing market.
The Fed said last week, after a meeting of its governing board, that it will also reduce its buying of Fannie Mae and Freddie Mac securities to $175 billion from $200 billion. The central bank's weekly balance sheet said it now holds $148.12 billion of those securities, $1.16 billion higher than the previous week.
The Fed's purchasing programs have been credited with helping to force down mortgage rates.
Rates on 30-year home loans averaged 4.91 percent this week, down from 6.14 percent last year, according to mortgage company Freddie Mac. The rate was 4.98 percent last week.