Euro area banks expect the ongoing growth in the demand for loans to continue in the third quarter, as credit conditions may be eased for housing loans and consumer credit, results of a survey by the European Central Bank showed Tuesday.
However, the ECB said the latest Bank Lending Survey was conducted between June 14 and 29 and it may have been too early for banks to assess the implications of the June 23 referendum in the U.K., in which 52 percent Britons chose to leave the EU in a surprise move.
“When splitting bank replies at the country level into replies given before and after the UK referendum on EU membership, no negative shock can be identified for credit supply or demand,” the ECB said in the report.
“It may have been too early for the banks to assess the implications of the referendum.”
Credit standards for loans to enterprises eased further in the second quarter and at a more pronounced pace than that seen in the previous three months. Marginal easing was witnessed in the credit standards for housing loans, in contrast to expectations that they will be tightened. Credit conditions for consumer credit continued to eased, the survey said.
The survey attributed the net easing of credit conditions for loans to enterprises mainly to competitive pressures.
Looking ahead, banks expected credit standards on loans to enterprises to remain broadly unchanged in the third quarter, while those for housing loans and consumer credit are forecast to ease.
Demand for loans to enterprises increased further in the second quarter and banks expect the trend to continue in the three months to September. Similarly, the demand for housing loans and consumer credit is also expected to rise further in the third quarter.
In the second quarter, merger and acquisition activities, inventories and working capital, the general level of interest rates and debt refinancing weer the main factors fueling demand for loans for enterprises, while the positive contribution from fixed investment declined further.
Housing loan demand was led by the low general level of interest rates, continued favorable housing market prospects and consumer confidence, the report said. Consumer credit demand was fed by spending on durable goods, consumer confidence and the low general level of interest rates.
Among the Eurozone countries, credit standards on loans to enterprises eased in France, Italy and Germany, while they held steady in Spain and the Netherlands.
Banks in France, Italy and Spain reported a net easing of credit standards for housing loans, whereas banks in Germany reported a net tightening due to the implementation of the EU mortgage credit directive. Credit standards for housing loans were unchanged in the Netherlands.