It is well to be noted that the Euro zone banks go on to expect a small rebound within the demand for mortgages as well as corporate loans for the first time ever in the last two years since the slump in lending went on to show early signs of moderating, said a survey from the European Central Bank on January 23.
Apparently, the results of the quarterly Bank Lending Survey are most likely going to strengthen the ECB’s view that the steepest increase within the interest rates in the euro’s history has now gone on to be fully passed on to the real economy, and notably, the lenders are starting to anticipate a recovery.
The poll went on to show that the lenders continued to tighten credit access in the last quarter of 2023, but very few banks did so than at any point in the last two years, and banks themselves had gone on to expect it three months earlier.
Among the four largest economies of the euro zone, like Germany, France, Italy, and Spain, none of them saw a net tightening when it came to credit standards for mortgages, and only Germany witnessed it in terms of corporate loans.
Although the banks anticipate to raise the bar when it comes to extending loans this quarter, they also see a minimal net increase within the demand for corporate credit as well as for mortgages for the first time ever since the early 2022, said the ECB.
According to economist at Natixis, Dirk Schumacher, that is what the beginning of a gradual recovery looks like, and that the standards are not getting tighter and even the demand is not shrinking as fast. Moreover, the survey showed that while terms and conditions experienced further tightening on consumer credit, they happened to ease for housing loans.
In the corporate loan gamut, there was almost no net tightening within services; however, this was more than offset by comparatively large net tightening within the commercial real estate, construction, as well as residential real estate sectors.
Notably, the banks’ access when it comes to funding by way of money markets, long-term deposits, as well as debt securities looked better as markets began anticipating rate cuts from the ECB.
However, the short-term retail funding along with securitization tightened pretty slim.