Credit supply tightens, demand falls in Q2 2026
The Banco de España reports that credit supply tightened across most segments in the second quarter of 2026, while loan demand continued to decline for businesses and housing. Banks anticipate further tightening of supply and a generalized decrease in demand for the third quarter.
Lending standards firm up
According to the Bank Lending Survey (BLS) for Q2 2026, lending standards tightened slightly for both corporate financing and household housing loans, remaining stable for consumer and other purpose loans.
This tightening was somewhat less severe than banks had anticipated three months prior, a development linked to reduced tensions in the Middle East following the US-Iran memorandum of understanding on June 15. General conditions for new loans also tightened for both household segments, while remaining largely unchanged for corporate financing.
For consumer loans, this materialized as higher interest rates due to increased bank funding costs.
Housing loans saw both higher interest rates and a moderate increase in margins for some entities, driven by a perception of higher risks, though mitigated by strong competition.
The percentage of rejected housing loan applications increased slightly.
Demand softens, climate risks emerge
Loan demand experienced moderate declines in Q2 2026 for corporate financing and housing loans, with demand for consumer loans remaining stable.
The decrease in corporate demand affected SMEs more than large firms, and long-term loans more than short-term.
Banks attributed the fall in corporate demand to lower fixed capital investment and higher interest rates.
For housing, weaker market outlook, increased use of own funds, and more credit from other entities explained the reduced demand.
The survey's annual module on climate change risks revealed a tightening of lending criteria for 'high-emission' companies and 'low energy efficiency' housing, alongside a relaxation for 'green' and 'in-transition' companies and 'high energy efficiency' buildings.
This also spurred demand for credit from green companies and for energy-efficient homes.
Persistent headwinds for credit
The continued tightening of credit supply and weakening demand signals persistent headwinds for the Spanish economy.
While geopolitical developments offered a brief reprieve, the underlying trends in funding costs and risk perception remain challenging.
The growing influence of climate-related factors on lending decisions highlights a significant, structural shift in banking practices.