The ECB's quarterly bank lending survey, which provides information on bank lending conditions in the eurozone, showed that euro area banks reported unchanged credit standards for loans or credit lines to enterprises in the third quarter. This follows more than two years of successive tightening.
The results reported in the October survey relate to changes observed during the third quarter of 2024 and expectations for the fourth quarter of 2024. The survey was conducted between 6 and 23 September 2024. A total of 156 banks were surveyed in this round, with a response rate of 99%.
While credit standards remained unchanged in net terms, risk perceptions were still reported as having a small tightening impact.
A further tightening of credit standards was reported only in two small countries, while a small net easing was reported in Germany.
Banks expect a renewed, albeit moderate, net tightening for the fourth quarter of 2024 (4%).
Banks reported a further net easing of credit standards for loans to households for house purchase, whereas a further net tightening was reported for consumer credit
For housing loans, competition from other banks and banks’ cost of funds and balance sheet situation were the main drivers behind the net easing of credit standards
A small tightening impact came from risk perceptions and “other factors”, the latter related to tighter sustainability rules for residential real estate.
Net demand for housing loans rebounded strongly, while consumer credit demand increased more moderately (net percentages of 39% and 8% respectively)
The net increase in housing loan demand was mainly driven by the general level of interest rates and housing market prospects.
The net increase was the highest since the second quarter of 2015 (42%), was above banks’ expectations in the previous quarter (26%) and broad based across euro area countries.
Consumer credit demand was supported by improving consumer confidence and spending on durables.
The net demand for consumer credit was also broadly in line with expectations (net increase of 7%).
In the fourth quarter banks expect loans in both categories to increase further, more substantially so for housing loans (44%) than for consumer credit (11%).
Banks’ overall credit terms and conditions eased strongly for housing loans and slightly for loans to firms, but saw a moderate tightening for consumer credit.
Lending rates and margins on average loans were the main drivers of the net easing of terms and conditions for housing loans and loans to firms.
Margins on both riskier and average loans were the main drivers of tighter consumer credit terms and conditions.