Euro area banks tighten corporate lending, ease housing credit in Q4 2025

In the fourth quarter of 2025, euro area banks tightened credit standards for firms (net percentage of 7%), citing higher perceived risks and lower risk tolerance.

This tightening surpassed expectations from the previous survey round.

Conversely, credit standards for housing loans eased slightly (net percentage of -2%), driven by competition, despite some tightening impact from risk perceptions.

For consumer credit, standards tightened further (net percentage of 6%), primarily due to banks' lower risk tolerance and elevated risk perceptions.

Regarding loan demand, firms saw a small net increase (3%), primarily for inventories and working capital, exceeding expectations.

Demand for housing loans also increased moderately (9%), in line with expectations, supported by improved housing market prospects.

However, demand for consumer credit declined slightly (net percentage of -2%), influenced by lower consumer confidence.

New questions in the survey revealed that almost half of banks consider their exposure to changes in trade policies and related uncertainty as important.

This factor contributed to a tightening impact on credit standards, mainly through decreased risk tolerance, and dampened demand for corporate loans.

Furthermore, regulatory and supervisory actions led banks to increase capital and liquid asset holdings, while temporarily reducing risk-weighted assets.

These actions also had a net tightening impact on credit standards across all loan categories.

Non-performing loan ratios and other credit quality indicators also contributed to a small net tightening of credit standards for all loan categories.