European Central Bank survey shows slight further tightening for corporate credit and easing for mortgages as demand diverges

The European Central Bank published its April 2025 bank lending survey, showing a small further net tightening of euro area banks’ credit standards for loans to enterprises in the first quarter of 2025, alongside an easing of standards for housing loans and a slight further tightening for consumer credit. Corporate loan demand moved back into slightly negative territory, while mortgage demand continued to rise strongly. Credit standards tightened for firms on net by 3% of banks, driven again by higher perceived risks linked to the economic outlook and firm and industry-specific conditions, and tightened for consumer credit by a net 3% mainly due to higher perceived risks. For housing loans, standards eased on net by 7%, largely attributed to competition from other banks. Terms and conditions eased for loans to firms and housing loans, and tightened for consumer credit, with lower lending rates and narrower margins on average loans easing conditions across segments, partly offset by stricter collateral requirements for firms and tighter loan maturity and size terms for consumer credit. On funding, access to retail funding was broadly unchanged, while access eased for debt securities, money markets and securitisations; banks also reported that the reduction in the ECB monetary policy asset portfolio had a small negative impact on market financing and liquidity, contributing to higher holdings of euro area sovereign bonds. For the second quarter of 2025, banks expect a further net tightening of credit standards across all three loan segments, a small net increase in loan demand from firms and further increases in household loan demand, especially for housing loans.