FORTUNE — The credit crunch is fading.
Banks increased lending by $37 billion during the first three months of the year. That was the largest jump in loans in any first quarter since 2008, according to data from the Federal Deposit Insurance Corp., which will be officially released later this month.
That’s good news for the economy. Until recently, lending had remained sluggish, despite historically low interest rates. The lack of loan growth had frustrated the Federal Reserve and other policy makers who have been trying to steer the economy out of the recession. Lending started to increase three years ago, but the first three months of the year has bucked the trend, perhaps because consumers tend to cut back on borrowing and pay down their debt after holiday spending.
MORE: As mortgage rates fall, borrowers inch back to the refinancing market
Just three years ago, the volume of loans outstanding at banks fell by $136 billion in the first quarter. Last year, it was down by $37 billion.
That changed this year. And the fact that lending was up might be another sign that the economic weakness in the beginning of year, which many blamed on the colder and snowier than usual weather, was indeed temporary.
Still, credit growth was uneven. Loans to corporations were up, but most consumer categories were down. Home lending, which has slowed recently after a big refinance boom a little over a year ago, dropped by nearly $14 billion. The one exception was auto lending, which was up.
What’s more, banks are still not lending nearly as much as they could. On average, banks have lent out the equivalent of just under 69% of their deposits. Before the financial crisis, that figure was routinely above 90%.
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It’s a matter of debate why banks haven’t been lending more. It’s possible that banks are unwilling to take risks with borrowers so soon after the financial crisis. On a recent call with analysts, JPMorgan Chase (JPM) CEO Jamie Dimon said that bankers are loath to issue mortgage loans “with any hair on it.” Other bankers have said there isn’t as much demand for loans. New regulations could be holding back lending as well.
And the new lending hasn’t been a bonanza for banks, either. Low interest rates means they collect less money on every new loan they make. The so-called net interest margin, the percentage of interest banks collect as a percentage of loans, dropped to a new post-financial crisis low. As a result, bank profits dropped in the first quarter from a year ago, but were higher than they have have been over much of the past few years.
Of course, with the Fed continuing to taper its bond purchases, you would expect interest rates to rise. Instead, they have been drifting downward lately. If that doesn’t change soon, the recent jump in bank lending could just be a blip.