Federal Home Loan Bank Board Chairman Robert M. McKinney yesterday told the U.S. Conference of Mayors that he would ask Congress to pass legislation enabling the savings and loan industry to increase lending in urban areas.

The statement was not intended to break new ground but rather to reaffirm McKinney's previously enunciated policy of encouraging private lenders to become more involved in the nation's central cities. His words were enthusiastically received by the mayors.

Mayor Lee Alexander of Syracuse, chairman of the conference, declared, "We have found a new partner in Mr. McKinney and the Federal Home Loan Bank Board in efforts to fund central city housing, including rehabilitation of older homes.' He added he expected the conference's executive committee would vote tommorrow to adopt McKinney's three plan. The legislative proposals are:

Authority for S&Ls to invest in urban areas participating in Community Development Block Grant or other federal dollars city and programs.

Substantial increased authority for S&Ls to invest in rehabilitation and home improvement loans.

Limited authority for S&Ls to invest in state and local sponsored housing finance agencies.

A FHLBB Spokesman said the board had not yet decided whether to lift the 5 per cent ceiling and ask Congress to let S&Ls lend at their own discretion. The same holds true far raising or eliminating the current $15,000 ceiling on rehab and improvement loans.

As for loans to state and local housing finance agencies, the spokesman indicated the board would favor a conservative approach, perhaps requiring a minimum bond rating or relating the loan amount to the S&L's net worth.