The July 2026 euro area bank lending survey reports moderate tightening of credit standards, slight increase in firm loan demand, and a decline in household loan demand amid geopolitical and energy risks.
The July 2026 bank lending survey (BLS) indicates a moderate net tightening of credit standards by euro area banks in the second quarter of 2026, with a net 7% of banks tightening standards for loans to enterprises. Credit standards for household loans, including house purchase and consumer credit, also tightened (net 9% and 12%).
Banks cited perceived risks to the economic outlook and lower risk tolerance, driven by geopolitical and energy developments, as main factors for the tightening. Expectations for the third quarter of 2026 suggest further tightening across all loan categories.
Terms and conditions for loans became more restrictive, mainly due to higher interest rates. The share of rejected loan applications increased for all borrower groups, especially for consumer credit.
Loan demand to firms increased slightly (net 3%), supported by higher inventories, working capital, and investment needs. However, demand for housing loans declined significantly (net -15%), influenced by deteriorating consumer confidence and interest rate changes. Demand for consumer credit and other household loans softened (net -2%).
Access to retail funding, debt securities, and money markets deteriorated slightly, while securitisation access remained stable. Banks expect further deterioration in funding access over the next three months.
Credit standards for loans to firms and consumer credit are expected to tighten further in the third quarter of 2026, influenced by credit quality indicators like non-performing loan ratios. Housing loan standards are expected to remain broadly unchanged.
Most economic sectors experienced tightening of credit standards in the first half of 2026, especially energy-related manufacturing sectors such as the car industry. Further tightening is anticipated across most sectors in the second half of 2026, with stable standards for services and real estate.
Firms making progress in green transition and those with good energy performance of buildings experienced easing of credit standards and increased demand, driven by climate-related investment needs and regulatory factors. Conversely, high-emitting firms and buildings with low energy performance faced tighter standards and reduced demand, with physical risks and regulatory uncertainties impacting lending decisions.
The survey was conducted between 15 and 30 June 2026, involving 159 banks with a response rate of 100%. The results provide insights into bank lending behavior and expectations in the euro area for the upcoming quarter.
