Business · Economy · 12 hrs ago
Euro-area banks tighten lending as demand for mortgages and business loans falls
The European Central Bank’s survey found that euro-area banks tightened lending standards in the third quarter of 2026.
Higher perceived risks led banks to make business loans harder to obtain, while households and companies also sought fewer loans.
Mortgage demand fell by 27% on net, its sharpest drop since the third quarter of 2023.
Higher interest rates weakened demand alongside lower consumer confidence and less favorable housing-market expectations.
The decline in mortgage demand was reported in Germany, Spain and France, while it remained stable in Italy.
Banks also reported rejecting more mortgage applications and tightening some loan terms.
Banks expect mortgage demand to fall further in the next quarter and plan to tighten lending standards for housing loans.
Euro-area banks tightened lending standards for businesses in the third quarter of 2026, while demand for business loans and mortgages fell.
Net 9% of banks reported stricter standards for business loans, up from 7% in the previous quarter.
Mortgage demand fell by a net 27%, its sharpest decline since 2023, and business-loan demand fell to a net 6% decline.
Banks cited higher credit risks, rising interest rates and weaker willingness to invest among the factors affecting lending and demand.
Banks expect mortgage demand to fall further in the fourth quarter.
- Who
- Banks in the euro area, surveyed by the European Central Bank.
- What
- Banks tightened standards for business loans and reported weaker demand for business loans and mortgages.
- When
- In the third quarter of 2026; the survey was conducted from September 21 to October 6.
- Where
- The euro area.
- Why
- Banks cited higher credit risks, rising interest rates, lower risk appetite and geopolitical uncertainty; borrowers’ demand was also affected by weaker investment appetite.
This story does not have two clearly opposing sides.
The European Central Bank conducted its survey of 159 euro-area banks.
Banks reported tighter standards for business loans and a sharp fall in mortgage demand.
ANSA reported separate survey findings on companies’ access to credit.
Finews.ch, Handelsblatt and El Confidencial reported findings from the European Central Bank’s bank lending survey.
- Survey respondents
- 159 euro-area banks
- Business-loan standards
- Net 9% reported tightening in the third quarter of 2026, compared with 7% in the previous quarter
- Business-loan demand
- Net balance fell from +3% in the second quarter to -6% in the third quarter
- Mortgage demand
- Net balance fell from -15% to -27%, the sharpest decline since 2023
- Mortgage terms
- Net 16% of banks reported tighter terms and conditions
- Expected mortgage demand
- Banks forecast a net balance of -36% for the fourth quarter
6 sources
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What people are saying
The evolution of interest rates exerted substantial downward pressure on demand for mortgage loans and contributed increasingly negatively for the third consecutive quarter
For corporate loans, this was the first decline in more than two years