The April 2026 euro area bank lending survey shows banks tightened credit standards, and loan demand decreased amid geopolitical tensions, energy developments, and higher funding costs.
The April 2026 euro area bank lending survey indicates that banks reported a further, larger than expected, net tightening of credit standards for loans to enterprises in the first quarter of 2026. The net tightening was 10% of banks, driven by perceived risks and lower risk tolerance, with geopolitical and energy developments exerting additional pressure.
Credit standards for loans to households for house purchase saw a small net tightening of 2%, while standards for consumer credit and other lending to households tightened more significantly (net 15%). The most pronounced tightening since Q3 2023 highlights a continued trend since mid-2025.
Banks expect a widespread and more marked net tightening of credit standards in the second quarter of 2026 for loans to firms and households for house purchase, with further tightening expected for consumer credit. Overall terms and conditions tightened for loans to firms and consumer credit, but remained unchanged for housing loans.
Loan application rejections increased across all borrower groups, with a higher net increase for consumer credit. Loan demand decreased slightly for firms (-2%), mainly due to reduced fixed investment, while demand for housing loans remained unchanged. Demand for consumer credit and other household lending declined sharply (-11%), influenced by lower consumer confidence and higher interest rates.
Access to debt securities, money markets, and securitisation markets deteriorated in Q1 2026, with expectations of further deterioration over the next three months. Credit quality indicators, including non-performing loan ratios, contributed to tightening credit standards for loans to firms and consumer credit, but not for housing loans.
ECB key interest rate decisions had a neutral impact on net interest income over the past six months. Banks expect a positive effect on profitability from higher margins and a negative effect from volume changes in the next two quarters.
Nearly half of euro area banks reported using securitisation, primarily synthetic SRT, to free up capital, improve liquidity, manage credit risks, and meet regulatory requirements. Securitisation supported loan volumes, especially for firms, and is expected to have an increasingly positive impact on lending in the coming year.
The survey was conducted between 19 March and 7 April 2026, with 161 banks participating, achieving a response rate of 100%. The results provide insights into bank lending behavior in the euro area during this period.
