As I expected, the source of this claim is the standard modern history of the Inquisition, The Spanish Inquisition by Henry Kamen (fourth edition, 2014). Chapter 9 gives us the details:
The Inquisition was unusually fortunate in its choice of residences. In some of the largest cities of Spain it was allowed the use of fortified castles with ancient and reliable prison cells. …
In all these buildings the gaols were in a fairly good condition. This may explain why the [private] prisons of the Inquisition were generally considered less harsh and more humane than either the royal prisons or ordinary ecclesiastical gaols. There is the case of a friar in Valladolid in 1629 who made some heretical statements simply in order to be transferred from the prison he was in to that of the Inquisition. On another occasion, in 1675, a priest confined in the episcopal prison pretended to be a judaizer in order to be transferred to the inquisitorial prison. In 1624, when the inquisitors of Barcelona had more prisoners than available cells, they refused to send the extra prisoners to the city prison, where ‘there are over four hundred prisons who are starving to death and every day they remove three or four dead.’ No better evidence could be cited for the superiority of inquisitorial gaols than that of Córdoba in 1820, when the prison authorities complained about the miserable and unhealthy state of the city prison and asked that the municipality should transfer its prisoners to the prison of the Inquisition, which was ‘safe, clean, and spacious. At present it has twenty-six cells, rooms which can hold two hundred prisoners at a time, a completely separate room for women, and places for work.’ On another occasion the authorities there reported that ‘the building of the Inquisition is separate from the rest of the city, isolated and exposed on all sides to the winds, spacious, supplied abundantly with water, with sewers well distributed and planned to serve the prisoners, and with the separation and ventilation necessary to good health. It would be a prison well suited to preserve the health of prisoners.’
… The prison cells also often had an open regime. In some tribunals, the prisoners were free to come and go, providing they observed basic rules. In 1655 a report on the tribunal of Granada observed that prisoners were allowed out at all hours of the day without restriction; they wandered through the city and its suburbs and amused themselves at friends' houses, returning to the city only at night; in this way they were given a comfortable lodging-house for which they paid no rent.
For more details on these anecdotes, he offers his own book The Phoenix and the Flame: Catalonia and the Counter Reformation, which I don't have access to.
To answer the other half of the claim, was the Inquisition a merciful court for its time? By the standards of both secular and religious courts, yes. Again from Chapter 9:
By the 1560s, indeed, Spain was one of the countries with the lowest level of executions for religious reasons. … The proportionately small number of executions is an effective argument against the legend of a bloodthirsty tribunal. … it would seem that during the sixteenth and seventeenth centuries fewer than three people a year were executed by the Inquisition in the whole of the Spanish monarchy from Sicily to Peru, certainly a lower rate than in any provincial court of justice in Spain or anywhere else in Europe. A comparison, indeed, of Spanish secular courts with the Inquisition can only be in favor of the latter.
This is not to say that the Inquisition would be acceptable today, nor that it was lacking in racial prejudices, pointless tortures, and legally harmful practices like anonymous witnesses. All the courts of 16th c. Europe were miserably corrupt by our standards.
But by the standards of the 15th and 16th cc., the auto-da-fé was not shocking to the conscience of any West European. The myth of a court that was out of the ordinary for its period is part of the Black Legend of the Spanish Inquisition created by Spain's political enemies in Holland and England; the Inquisition was subsequently used in French Revolutionary propaganda and became symbolic of the Catholic Church. Historical revision of the Inquisition is currently the subject of lively academic discussion.