The German Bundesbank’s latest Bank Lending Survey shows that German banks tightened credit standards for loans to companies and private households in the second quarter of 2026, mainly because they saw higher credit risk. Tightening in corporate lending was less pronounced than in the previous quarter and below what banks had expected in the April survey, but banks still made actual loan terms more restrictive for corporate borrowers and for residential mortgages. Credit demand moved in opposite directions across segments: demand from companies increased, driven by large firms and long-term borrowing, while demand for household mortgages and for consumer and other household loans fell sharply. Net tightening in lending standards stood at 10% for corporate loans, down from 16% in the previous quarter, 7% for housing loans to households, up from 4%, and 11% for consumer and other household loans, unchanged from the prior quarter. In corporate lending, the latest tightening mainly affected large companies and, over the past six months, was strongest for real estate, manufacturing and trade, with particularly marked restraint toward automotive and energy-intensive manufacturing. Banks linked the rise in credit risk in corporate lending to sector- and firm-specific factors as well as a weaker economic backdrop, while the conflict in the Middle East had so far had little effect on corporate lending standards. Tighter loan terms reflected higher lending rates and wider margins on riskier loans, and banks also tightened covenants for corporate credit. Climate-related risks and measures to manage the climate transition also made lending more restrictive over the past 12 months for high-CO2-emitting companies, transition firms and mortgages for low-energy-efficiency buildings, while green companies and more energy-efficient housing were treated more favorably. Banks also reported slightly worse funding conditions overall, especially for short-term customer deposits and bond issuance, while non-performing loan ratios and other credit-quality indicators did not materially contribute to tighter standards in any segment in the quarter. For the third quarter of 2026, banks expect lending standards to remain broadly unchanged across all three segments, although they did not rule out future adjustments because of uncertainty over the Middle East conflict. They expect corporate loan demand to rise further, while household demand is seen declining again.
German Bundesbank2026-07-21
German Bundesbank survey shows banks tightened lending standards across all segments in second quarter, corporate demand rose while household demand fell
The German Bundesbank’s Bank Lending Survey shows German banks tightened lending standards across corporate, housing and consumer credit in the second quarter of 2026, mainly because credit risk increased. Loan terms also became more restrictive for companies and mortgages, while demand rose for corporate loans but fell sharply for household borrowing. Banks expect standards to stay broadly unchanged in the third quarter, with further growth in corporate demand and another decline in household demand.