The German Bundesbank published the July Bank Lending Survey (BLS) results for Germany, showing that banks tightened lending standards for loans to companies and households in the second quarter of 2025, while demand for bank credit continued to rise in all three surveyed segments. Net of respondents, lending standards tightened by +3% for corporate loans (limited to small and medium-sized enterprises), +11% for housing loans to households (after -7% in the previous quarter), and +11% for consumer and other household loans (after 0%). Contractual lending terms were little changed for corporate lending and housing loans, but became more restrictive for consumer credit. Banks attributed the tightening mainly to higher perceived credit risk and lower risk tolerance, and pointed to weaker household creditworthiness for consumer lending. Higher non-performing loan (NPL) ratios and other credit-quality indicators constrained credit supply in all segments; rejection rates rose again for corporate lending (especially SMEs) and for consumer credit, while remaining unchanged for housing loans. Sectorally, standards were tightened most over the past six months for commercial real estate and manufacturing, and banks reported a slightly improved funding situation compared with the previous quarter. Climate-related risks and transition policies were associated with tighter standards for “brown” firms and firms in transition, and with tighter mortgage standards for buildings with poor energy efficiency. For the third quarter of 2025, banks planned to ease corporate lending standards, while indicating that household lending standards could tighten further if borrower creditworthiness deteriorates. Demand was expected to keep increasing across corporate, housing and consumer lending, and banks anticipated that the restrictive influence from credit-quality metrics would persist.

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