If what he intends European Central Bank The increase in interest rates was to limit demand. loans and mortgages For companies and households in the euro area (as an intermediate step towards lowering demand and inflation), it appears to be successfully achieving its target. banks harden the terms lending, as well as financing request The number of companies and families has dropped to typical levels. global financial crisis year 2008 and euro crisis 2011. This is by the European Central Bank (ECB) itself bank lending survey in the euro area Corresponding to the first quarter of 2023 (the period when some regional banks in the US fell and Credit Suisse in Europe sank) was released this Tuesday, two days after a new meeting in which a new turn in politics is expected is the currency of the European Central Bank.
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Of the 158 eurozone banks surveyed by the ECB From March 22 to April 6detecting a decrease in loan demand among its customers, companies 38% more than those who did not (three times the 12% recorded in the fourth quarter of 2022). Meanwhile, the decline in mortgage demand is being felt in most businesses, by 72% (it was already 74% at the end of 2022) that exceeds non-takers by 72%. decreased demand for financing, consumption In the first quarter of the year, it reaches a net 19% among the organizations participating in the survey.
In particular, the demand for business loans has declined sharply in the four largest eurozone countries (Germany, France, Italy and Spain). Moreover, the decline in the net demand for housing loans in the first quarter was particularly sharp in Germany, Spain and France.
latest data from Bank of Spain In Spain, in the first two months of the year, new mortgage operations showed a 13% decline and new loans to companies dropped by 6%, while those for consumption rose 3.5% in the two-month period.
The European Central Bank found that banks tightened their loans at the highest rate since the euro zone sovereign debt crisis in 2011.
“Substantial” hardening, especially in Spain
In the first quarter of the year, banks “significantly” re-tightened lending conditions to companies, more intensely than they had anticipated, and “at the highest rate since the eurozone sovereign debt crisis in 2011″, according to the ECB. 2011.” Spain (for every two banks that did not harden loans to companies, three more did); 10% in Germany; 33% in France and 45% in Italy.
Regarding this offer credit to companies. on the other side of the table, job request for loan It also fell “hard” in the first quarter, “the biggest drop since the global financial crisis,” at the end of 2008″, as a result of the increase in interest rates. In addition, organizations expect further tightening, albeit moderately, in corporate loans and a fresh decline in demand for the second quarter.
Mortgages and consumption
Something similar happened with mortgage loan The tightening was slightly less pronounced for loans, while given to families for home purchases. consumption. “The net decline in home loan demand continued to be strong in the fourth quarter of 2022 and close to the highest net decline since 2003, when the survey began,” the ECB bulletin said. The decline in mortgage demand was driven by “high interest rates, weakening housing market expectations and low consumer confidence“, pointing out. The net percentage of banks reporting a decline in mortgage demand was close to 100% in Spain in the first quarter. By contrast, the net decline in consumer loan demand was smaller in the first quarter: consumer loan demand declined net in Germany, Spain and, to a lesser extent, Italy, while changes in France remained flat.
more difficult criteria
Not only are the terms of loans to companies and families being tightened (with higher interest rates and tougher terms); In addition, euro zone banks are tightening their loans. credit standards; that is, in the approval criteria of loans. The number of European banks that tightened their standards for lending to companies in the first quarter of the year surpassed those that did not by 27%, reaching 50% in 2019. Francedespite, in Spain this rate (after exceeding 30% at the end of 2022) fell below 20%.
“From a historical perspective, the pace of tightening of credit standards has remained the same. highest level since sovereign debt crisis Eurozone growth in 2011”, concludes the survey. All this is due to banks’ higher risk perception and financial turmoil In addition to March, lower liquidity position From financial institutions in a context where the ECB has requested repayments of financing routes (TLTRO) it has provided in recent years. The ECB bulletin states, “The phasing out of TLTRO III is expected to lead to widespread tightening in the second and third quarters of this year.” In addition, organizations are expanding their margins on “the riskiest loans” to both companies and families.
rejected applications
“In the first quarter of 2023, banks reported a widespread increase in interest rates. rejected applications for all loan categories, for business loans, it reaches the highest net percentage recorded since the question was first asked in 2015. In Spain, banks that increased their refusal of requested loans were 15% higher than those that did not, a rate similar to the eurozone average for the first quarter of this year.
As a result, banks declare in the ECB survey that rate hikes are doing very well for their business and profitability. “Eurozone banks are convinced that key ECB interest rate decisions are interest margins in the last six months,” according to responses to a new question introduced in this survey round.
Source: Informacion
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