Euro area banks tightened lending standards across all major loan categories in the first quarter of 2026, according to the latest ECB bank lending survey, with stricter conditions driven mainly by rising economic risks and lower risk tolerance. Banks expect this trend to continue in the coming months, citing geopolitical tensions, energy market uncertainty, and higher funding costs.
At the same time, demand for loans weakened. Companies reduced borrowing mainly due to lower investment activity, while households showed less interest in credit as consumer confidence declined and spending—especially on durable goods—fell. Demand for consumer loans dropped significantly, while housing loan demand stagnated.
Banks also reported a rise in rejected loan applications and tighter lending conditions, particularly for businesses and consumer credit. Access to funding through financial markets deteriorated, and institutions expect further tightening ahead.
Nearly half of euro area banks are increasingly using securitisation to support lending, manage risks, and improve liquidity, often relying on non-bank investors such as funds and insurance companies.
Overall, the survey signals a more cautious banking environment, with stricter lending, weaker demand, and growing reliance on alternative financing tools.
