Eurozone banks tighten lending standards for companies as demand for home loans falls sharply

Euro area banks tightened their credit approval criteria for firms and consumer credit in the third quarter of 2026. Demand for housing loans recorded the sharpest net decline in the past three years, according to the ECB survey. For the fourth quarter, banks anticipate a further weakening in household demand, but almost no change in the case of companies.

Euro area banks tightened their credit approval criteria for firms and consumer credit in the third quarter of 2026, while demand for housing loans recorded the sharpest net decline since the third quarter of 2023. The survey published on Tuesday, October 27, by the European Central Bank (ECB) shows that the net indicator of demand for housing loans fell from −15% to −27%. The figure measures the prevalence of declining demand in banks’ responses, not a 27% reduction in credit volumes.

In brief

1. Criteria for loans to firms were tightened, with a net balance of 9%, after 7% in the previous quarter. Corporate demand shifted from a net increase to a net decrease, with the indicator falling from 3% to −6%.

2. Demand for housing loans deteriorated sharply: the net balance fell from −15% to −27%, without this meaning a 27% reduction in lending. Approval criteria remained stable in net terms, while for the fourth quarter banks anticipate an even more widespread decline in demand.

3. Consumer credit was subject to stricter criteria, with a net balance of 14%, while demand declined slightly, to a net −2%. Banks expect further tightening and weaker demand in the final three months of the year.

4. Banks’ access to funding through deposits from firms and households deteriorated. The net indicator, at 9%, was the highest since the series began in 2011, although the ECB describes the deterioration as moderate.

5. More banks anticipate a gradual and sustained increase in demand for financing AI infrastructure, particularly data centers. The survey does not quantify the amounts already provided to these projects.

The Bank Lending Survey, known as the Bank Lending Survey (BLS), was conducted between September 21 and October 6, with all 159 banks in the sample participating. It collects lending officers’ assessments of changes over the past three months and expectations for the next three months. When aggregating the results for the euro area, national responses are weighted according to each country’s share of the stock of loans to firms and households; the calculation base differs between loan categories, depending on banks’ activities.

For companies, the net balance of tightening criteria reached 9%, compared with 7% in the second quarter and 5% anticipated in the previous survey. This indicator represents the difference between the shares of banks that tightened criteria and those that eased them, not the total percentage of banks that became more restrictive. The main factors cited were higher perceived risks and a reduced willingness to accept them, with some banks mentioning geopolitical uncertainty and developments in energy markets.

Approval criteria concern the risk profile and repayment capacity required of an applicant. They are distinct from the actual terms of the contract, such as the interest rate, fees, collateral, or maturity. In the third quarter, banks reported more restrictive contractual terms in all three segments analyzed, mainly because of higher interest rates.

Demand for corporate loans shifted from a net balance of 3% in the second quarter to −6%, although banks had anticipated a net increase of 4%. Interest rates were the main factor restraining demand, followed by weaker fixed investment by SMEs and the use of other sources of financing. Inventory and working-capital needs made a positive contribution. For the fourth quarter, banks expect demand from companies to be almost unchanged, with a net balance of −1%, and another tightening of criteria, at a net 7%.

Developments differed among the euro area’s major economies. In France, the net balance of tightening criteria for firms rose from 18% to 27%; in Germany it was 6%, in Spain 0%, and in Italy −11%, indicating net easing. The ECB warns that differing national sample sizes limit direct comparisons of the magnitude and volatility of these indicators.

In the case of housing loans, the net decline in demand was more pronounced than in the previous quarter and than banks had anticipated, with banks previously indicating a balance of −12%. Higher interest rates had the strongest negative influence, followed by declining consumer confidence and weaker housing-market prospects. Although strong, the deterioration remained below the extreme levels seen in the previous interest-rate hiking cycle.

For demand, the ECB calculates the net balance as the difference between the shares of banks reporting an increase and those reporting a decrease. A balance of −27% shows that, after weighting, declining responses predominated by 27 percentage points. It measures neither the change in the value of loans, nor the decline in the number of applications, nor the intensity of the change at each bank.

Approval criteria for housing loans remained stable in net terms, with a balance of 0%. This does not mean that all banks kept their criteria unchanged: some may ease them, while others may tighten them. At the same time, contractual terms tightened, especially through higher interest rates, meaning that a loan can become more expensive even if the profile required of the applicant does not change.

Separate interest-rate statistics provide a benchmark for the cost of financing. In August 2026, the composite indicator of the cost of new housing loans in the euro area rose by six basis points, to 3.60%, while that for companies remained almost unchanged, at 3.77%. These are statistical averages for the euro area, not rates offered to each customer, and they describe August, not the entire third quarter.

For the final three months of the year, banks anticipate an even more widespread decline in demand for housing loans, with a net balance of −36%. At the same time, they expect approval criteria to tighten, with a balance of 10%. These figures express respondents’ expectations, not developments that have already occurred.

For consumer credit and other loans to households, the net balance of tightening criteria reached 14%, after 12% in the previous quarter. The series of tightening has continued without interruption since the second quarter of 2022. Demand declined slightly, with a net balance of −2%, amid interest rates, lower confidence, and weaker spending on durable goods. For the fourth quarter, further tightening, at a net 16%, and a decline in demand, at a net −14%, are anticipated.

Banks also reported an increase in the share of rejected applications across all segments. The net balance of responses indicating this increase was 10% for consumer credit and 5% for both firms and housing loans. The figures describe responses concerning changes in the share of rejections; they do not represent actual application rejection rates.

Banks’ access to funding through company and household deposits, debt-securities markets, and the money market deteriorated, while securitization financing remained almost unchanged. For deposits and other retail funding instruments, the net balance of 9% was the highest since the series began in 2011, above the previous maximum of 7% in the third quarter of 2023. The ECB nevertheless describes the deterioration as moderate. Banks anticipate additional difficulties in accessing all four categories of funding in the fourth quarter.

The reduction in the ECB’s monetary-policy asset portfolio had, according to banks, a slightly negative effect on market funding and liquidity over the past twelve months, while holdings of euro-area sovereign bonds increased. The effect on profitability was slightly positive: the increase in net interest income was partly offset by small capital losses. Banks expect these effects to continue over the next twelve months.

Questions dedicated to artificial intelligence indicate a possible source of future demand. More banks anticipate a gradual and sustained increase in requests for financing digital infrastructure, particularly data centers, with greater emphasis on infrastructure providers than on software developers or firms adopting AI. Most have not yet introduced specific quantitative criteria for these loans, while some include AI risks in the qualitative assessment of borrowers. The survey does not quantify the amounts already provided for AI infrastructure.

The BLS provides banks’ perspective and is distinct from the ECB’s survey on enterprises’ access to finance, SAFE, published on October 26. SAFE collects companies’ responses about the availability of loans, costs, and obstacles encountered, meaning that the two surveys examine financing from different positions.

The BLS results concern the euro area and do not directly describe lending conditions in Romania. They help the ECB assess how financial conditions are transmitted to firms and households, but they do not constitute a decision on monetary-policy interest rates.

https://2eu.brussels/ro/news/bancile-din-zona-euro-inaspresc-conditiile-pentru-companii-iar-cererea-de-credite-ipotecare-se-deterioreaza-puternic