Banks in the Eurozone expect a slight recovery in demand for housing and corporate loans in the early months of this year, according to a survey by the European Central Bank released on Tuesday.
At the end of 2023, banks net tightened their lending criteria, with stricter conditions for companies and consumer loans, while easing for housing loans, as determined by the ECB survey involving 157 lenders.
Stricter conditions were primarily expected in the business sector by companies in the construction and real estate sectors.
The main reason for the tightened lending standards is the perception of risk, the ECB found, and most surveyed banks expect to tighten them further in the first quarter of 2024.
Demand from companies and households for loans significantly weakened again at the end of 2023 due to rising interest rates, the ECB noted, highlighting reduced fixed investments by companies, shaken consumer confidence, and weaker prospects for the housing market.
However, banks expect a slight net recovery in demand for corporate and housing loans at the beginning of 2024, the first time since early 2022.
– The expected net increase is related to banks’ assessments of long-term demand for loans, while short-term demand is expected to remain unchanged – states the report.
