Anna 
Euro zone banks are cautiously optimistic about a minor upturn in the demand for mortgages and loans to businesses in the early months of this year, according to a survey released by the European Central Bank (ECB) on Tuesday.
The ECB’s quarterly Bank Lending Survey indicated that while lenders continued to restrict access to credit in the last quarter of the previous year, the pace of tightening had moderated. Notably, fewer banks tightened credit access compared to any point in the past two years, and the proportion was less than what the banks had anticipated three months prior.
Despite expectations of maintaining tightened loan criteria in the current quarter, banks foresee “a small net increase” in the demand for loans to companies and mortgages. This marks the first positive projection since early 2022, signaling a potential shift in the lending landscape.
The survey also highlighted changes in lending terms and conditions, revealing a further tightening in consumer credit while showing an easing trend for housing loans.
In the realm of corporate loans, the survey indicated “almost no net tightening in services.” However, this was counterbalanced by a “relatively large net tightening” in sectors such as commercial real estate, construction, and residential real estate.
The banks’ access to funding through money markets, long-term deposits, and debt securities showed improvement, driven by market expectations of potential rate cuts from the ECB. However, there was a slight tightening observed in short-term retail funding and securitisation.
The findings suggest a cautious optimism among euro zone banks, acknowledging the ongoing need for prudence in lending practices while anticipating a gradual recovery in demand for loans in the coming months. The survey provides insights into the evolving dynamics of credit markets and serves as a valuable indicator for the broader economic landscape in the Eurozone.
