The European Central Bank published the October 2025 euro area bank lending survey, covering developments in the third quarter of 2025 and banks’ expectations for the fourth quarter. Banks reported a small, unexpected net tightening of credit standards for loans or credit lines to enterprises (4%), unchanged standards for housing loans (0%) and a moderate tightening for consumer credit (5%), alongside a net increase in rejected applications across all loan categories. Higher perceived risks linked to the economic outlook and firm-specific conditions drove the corporate tightening, with banks citing elevated geopolitical uncertainty and trade-related risks and reporting more intensive monitoring and sector or firm discrimination in credit risk assessments. Terms and conditions were broadly unchanged for corporate lending (1%), while demand from firms increased slightly (2%) but remained weak overall, supported by declining lending rates and refinancing needs. For households, mortgage terms and conditions eased moderately (-5%) and demand increased strongly again (28%), driven mainly by improved housing market prospects and lower lending rates, while consumer credit demand was broadly unchanged (1%) and rejection rates rose markedly (13%). Banks’ access to retail funding was broadly unchanged while wholesale funding conditions improved, and banks reported a broadly neutral impact from the reduction in the ECB’s monetary policy asset portfolio on financing conditions, liquidity and lending conditions over the past six months; key interest rate decisions were reported as weighing on net interest margins while the volume effect turned positive. For the fourth quarter of 2025, banks expect credit standards to remain broadly unchanged for firms (1%), to tighten slightly for housing loans (2%) and to tighten further for consumer credit (4%), with demand expected to be unchanged for firms (0%), to expand further for housing loans (8%) and to increase slightly for consumer credit (2%).
European Central Bank 2025-10-28
European Central Bank bank lending survey reports slight corporate credit tightening and higher rejection rates across loan categories
The European Central Bank's October 2025 euro area bank lending survey showed a slight net tightening of credit standards for enterprise loans (4%) and consumer credit (5%) in Q3, with unchanged standards for housing loans. Higher perceived risks and geopolitical uncertainties contributed to corporate tightening, while mortgage demand surged (28%) due to improved housing market prospects and lower rates. For Q4, banks anticipate stable credit standards for firms, slight tightening for housing loans (2%) and consumer credit (4%), with housing loan demand expected to grow further (8%).