The January 2026 euro area bank lending survey reports tighter credit standards for firms, slight easing for housing loans, and increased loan demand amid trade tensions and economic uncertainty.
The January 2026 bank lending survey (BLS) indicates that euro area banks reported an unexpected net tightening of credit standards for loans to enterprises in the fourth quarter of 2025, with a net percentage of 7%.
Credit standards for housing loans eased slightly with a net percentage of -2%, while standards for consumer credit and other household lending tightened further (net 6%).
For firms, the net tightening surpassed expectations from the previous survey, driven by concerns about the economic outlook and banks’ lower risk tolerance. Banks indicated a small net easing of standards for housing loans, influenced by competition, but risk perceptions and lower risk tolerance led to further tightening of consumer credit standards.
Looking ahead to the first quarter of 2026, banks expect a moderate net tightening of credit standards for firms, slight tightening for housing loans, and more pronounced tightening for consumer credit.
Terms and conditions tightened for loans to firms and consumer credit but eased for housing loans. The share of rejected loan applications increased for firms and households, with a higher increase for firms than households.
Loan demand increased slightly for firms (net 3%) and continued to grow for housing loans (net 9%), driven by improved housing market prospects. Demand for consumer credit declined slightly (net -2%), influenced by lower consumer confidence despite interest rate levels.
Access to retail funding and money markets deteriorated slightly, while access to debt securities and securitisations eased. Banks expect funding conditions to remain broadly unchanged in the next three months.
In response to regulatory actions, banks increased their capital and liquid assets, with a temporary decline in risk-weighted assets. They also reported a net tightening of credit standards across all loan categories due to these actions, with further tightening expected in 2026.
Small net tightening impacts from non-performing loan ratios and credit quality indicators were reported, mainly driven by risk perceptions and risk aversion. Expectations for 2026 include further small tightening for loans to firms and consumer credit, with a neutral impact on housing loans.
Credit standards tightened in sectors such as construction, wholesale and retail trade, energy-intensive manufacturing, and commercial real estate, with the strongest tightening in motor vehicle manufacturing. Expectations for the first half of 2026 include further tightening or stability across sectors, with increased loan demand in most sectors except motor vehicle manufacturing, wholesale and retail trade, and commercial real estate.
Regarding trade policy uncertainty, nearly half of surveyed banks considered their exposure important, reporting a tightening impact on credit standards and demand, mainly through decreased risk tolerance. Similar effects are expected in 2026.
The survey was conducted by the Eurosystem between 15 December 2025 and 13 January 2026, with 153 banks participating at a 100% response rate. The results relate to changes in the fourth quarter of 2025 and expectations for the first quarter of 2026.
