Loans in the Eurozone Have Become More Accessible Due to Looser Lending Conditions

Loans in the Eurozone have become more accessible in the first quarter of this year as banks have eased lending conditions for both companies and individuals, according to the results of the latest survey by the European Central Bank (ECB).

Credit standards – the criteria that banks apply when deciding whether to grant a loan to an individual or a company – were “significantly” looser in the first quarter for individuals seeking mortgage loans as well as for companies, with slightly less relaxed criteria for consumer lending, banks responded to the ECB in the regular monthly survey.

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The April survey, which involved 149 European banks, was conducted between March 15 and April 3, the ECB noted.

In all three categories of lending, as reported by banks, the conditions for refinancing loans have also improved in the meantime. Additionally, lenders highlighted a continuous increase in borrower demand during the first three months of this year, as shown by the ECB’s research.

As for companies, they sought funds due to low interest rates, mainly for investment needs and mergers and acquisitions, while homebuyers, who were also attracted by low interest rates, showed greater optimism regarding economic prospects, hoping to benefit from rising prices in the real estate market.

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The ECB has reduced key interest rates to record low levels and injected nearly 2.4 trillion euros into the Eurozone economy as part of quantitative easing and the bond-buying program. The aim of this program is to ensure that money reaches companies and consumers through the financial system, thereby supporting economic growth and inflation towards the target of slightly below two percent.

Banks told the ECB’s survey that low interest rates and the bond-buying program encouraged them to ease refinancing conditions and prompted them to increase lending.

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No changes are expected regarding interest rates or the bond-buying program at the ECB meeting on Thursday, which is expected to help protect the area of the common currency from threatening economic dangers such as protectionism and potential conflicts.