Banks in the euro zone expect demand for corporate loans, consumer credit and mortgages to grow in the first quarter with credit standards also easing, the European Central Bank said on Tuesday in its quarterly lending survey. Buying trillions of euros worth of public and private bonds over the past three years, the ECB has kept borrowing costs low, hoping to induce borrowing and spending, all with the aim of boosting inflation.
Although the scheme worked more slowly than expected, household and corporate lending are at their post-crisis high and euro zone economic growth is now considered self-sustaining, raising the prospect that the ECB would continue to withdraw stimulus. In the last three months of 2017, banks saw increased demand for all types of loans, and while corporate and consumer credit standards - internal guidelines or loan approval criteria - were unchanged, they eased for mortgages, the ECB added.
"Across the large euro area countries, credit standards on loans to enterprises eased marginally in Germany, tightened in Italy and remained unchanged in France, Spain and the Netherlands in the fourth quarter of 2017," the ECB said. "For housing loans, banks eased their credit standards on housing loans in all major countries except for Italy, where they remained unchanged," it added. In terms of net demand, corporate lending among the biggest euro zone countries rose in Germany, France, Italy and the Netherlands. Among households, increases were recorded for Spain, Italy and the Netherlands, the ECB said.
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