FHLB advances seen $1 trillion by August-regulator

BOSTON, May 6 (Reuters) - Short-term loans to banks by the Federal Home Loan Banks are on pace to hit $1 trillion by August as financial institutions continue to seek liquidity for housing, the FHLBs' federal regulator said on Tuesday.

"We currently have out about $925 billion worth of advances (outstanding and) at the rate things are going we will hit the $1 trillion mark in August," Ronald Rosenfeld, chairman of the Federal Housing Finance Board said on a panel hosted by the Mortgage Bankers Association. The level is up about $300 billion from June 30 of last year, he said.

The FHLB system raises low-cost money for its shareholder banks with proceeds from debt in the so-called federal agency debt market. The advances to member institutions have soared since last year as the credit crunch squeezed off access to other sources of capital. (Reporting by Al Yoon and Scott Malone; Editing by James Dalgleish)