Banks in the eurozone have tightened conditions for loans to citizens and companies

According to the results of the European Central Bank’s (ECB) July survey on bank lending, seven percent of surveyed banks reported a tightening of criteria for loans and credit lines to companies.

The criteria were also tightened for housing loans, which was reported by nine percent of banks, and for consumer and other household loans, where a net tightening was recorded by 12 percent of banks.

Banks expect that lending criteria will be further tightened in the third quarter of this year in all loan categories.

The specific conditions contracted with clients have also been tightened, primarily due to higher interest rates. At the same time, the proportion of rejected loan applications increased, especially when it comes to consumer lending.

The company’s demand for loans and credit lines in the second quarter increased slightly, by three percent, although banks had previously expected it to drop by ten percent, reports Fena.

In contrast, the population’s demand for housing loans was significantly reduced, by 15 percent. The decline was mainly influenced by the deterioration of consumer confidence, changes in interest rates and weaker prospects in the real estate market.

In the third quarter, banks expect a further decline in the demand for housing loans, while the demand for consumer loans should remain unchanged.

Banks’ access to funding sources, including retail deposits, money markets and debt securities, deteriorated slightly during the second quarter.

Credit criteria in the first half of the year were tightened in most economic sectors, except for services, excluding financial services and real estate operations.

Banks, on the other hand, eased the criteria for financing environmentally sustainable companies and enterprises making progress in the green transition.