The European Central Bank (ECB) has published its bank lending survey for the third quarter of 2026, showing further tightening of credit standards for firms and consumer credit alongside declining loan demand. A net 9% of banks tightened standards for firms, up from 7% in the second quarter, while the corresponding share for consumer credit rose to 14% from 12%. Both exceeded banks’ earlier expectations. Housing loan standards remained unchanged overall. Higher perceived risks and lower risk tolerance drove the tightening, while higher lending rates tightened contractual terms across all three lending segments. Housing loan demand weakened most sharply, with a net 27% of banks reporting a decrease, the largest balance since the third quarter of 2023 and compared with an anticipated 12%. Higher interest rates, weaker consumer confidence and worsening housing market prospects drove the decline. A net 6% reported falling demand from firms, reversing the previous quarter’s increase despite expectations of further growth. Interest rates were the main drag on corporate demand, while weaker fixed investment and greater use of alternative financing also contributed. Consumer credit demand declined slightly, with a net 2% reporting a decrease. Access to retail funding deteriorated for a net 9% of banks, the highest reading since the series began in 2011, while access to debt securities and money markets also worsened. The reduction in the ECB’s monetary policy asset portfolio exerted modest tightening pressure on lending conditions. For the fourth quarter of 2026, banks expect tighter credit standards across all three segments, with net balances of 7% for firms, 10% for housing loans and 16% for consumer credit. Corporate loan demand is expected to remain broadly unchanged, while net balances of 36% and 14% anticipate further declines in housing loan and consumer credit demand, respectively.

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