Euro Area Banks Tighten Lending Standards Amid Rising Economic Risks
The European Central Bank's bank lending survey for the second quarter of 2026 found that euro area banks tightened their lending standards further, citing higher perceived risks to the economic outlook and lower risk tolerance.
Banks reported a net 7% tightening in credit standards for business loans and a net 9% tightening in standards for housing loans. The main reasons for these tightenings were again identified as higher perceived risks and lower risk tolerance, with banks continuing to monitor risks linked to geopolitical tensions and energy developments.
The survey also found that demand for business loans increased slightly, driven by increased financing for inventories and working capital, greater demand for fixed investment from large companies, and borrowing linked to debt refinancing and restructuring. However, demand for housing loans fell sharply, with a net 15% of banks reporting lower demand.