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Last Updated:
Apr 24, 2009 - 5:31:05 PM |
The squeeze on lending to home buyers and businesses that followed the onset of the credit crisis a year ago, has eased slightly in the last three months, the European Central Bank said on Friday.
The ECB said that the results of the July 2008 bank lending survey referring to the second quarter of 2008 indicate somewhat lower net tightening of credit standards for loans to enterprises than was observed in the first quarter. The most important factor in the net tightening continued to be a deterioration in expectations about the economic outlook. The impact on banks of the cost of funds and balance sheet constraints was somewhat lower than the impact of concerns about the economic outlook. Banks also reported somewhat lower net tightening of credit standards for loans to households for house purchase, but somewhat increased net tightening for consumer credit and other lending to households – albeit from a lower level.
A deterioration in expectations regarding general economic activity was an important factor in the net tightening of credit standards applied to these two types of household loan.
The survey of more than 100 banks showed the number of lenders reporting tighter credit standards for corporate and mortgage loans in the second quarter was lower than in the first quarter.
For corporate loans, 44 percent said they had toughened their standards in Q2, compared with 51 percent in Q1, although only 1 percent reported easier conditions.
In another positive sign, banks also reported easier access to money markets and debt securities, which had been a major barrier to their lending in previous quarters.
The ECB said that banks reported that net demand for loans to enterprises and households continued to be negative in the second quarter of 2008. Besides mergers and acquisitions (M&As) and corporate restructuring and fixed investment, another factor that contributed to lower net demand for loans to enterprises was internal financing. The negative net demand for loans to households for house purchase reflected mainly worsening housing market prospects and deteriorating consumer confidence.
