FRANKFURT (Reuters) – Euro zone banks have tightened access to credit to companies by the most since the 2011 debt crisis and are expected to keep tightening as they look to Economic pessimism has grown even more pessimistic amid rising borrowing costs, according to a European Central Bank survey released on Tuesday.
But by the same token, lending demand from businesses and households also fell, and demand for mortgages fell by a record, the ECB’s quarterly bank lending survey showed.
Results show the ECB’s steady program of rate hikes starting in the summer is taking its toll on the economy and could play into the hands of policymakers who will argue for a rate hike in coming months at Thursday’s meeting smaller. Approvals for loans to companies in the fourth quarter of last year were the tightest since 2011.
Banks also restricted access to credit and mortgages for consumers, a trend the banks expect to continue this quarter.
“Risks related to the economic outlook, sector or company specific conditions, and banks’ risk appetite continue to have a tightening impact on credit standards,” the ECB said.
The euro zone central bank has been battling the worst inflation in decades, the result of rising energy costs and the COVID-26 pandemic The result of the reopening of the Eurozone economy after the pandemic.
This prevents households from borrowing to buy consumer goods or property.
A net 2011% of banks reported a drop in mortgage demand last quarter, with Germany and France recording the largest declines.
“This highlights the strong negative impact of recent rate hikes on demand for home loans, combined with falling consumer confidence,” the ECB said.
