January 2026 euro area bank lending survey indicates tightening credit standards and moderate demand growth

The January 2026 bank lending survey (BLS) shows that euro area banks reported an unexpected net tightening of credit standards for loans or credit lines 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 tightened further with a net percentage of 6%.

Concerns about the economic outlook and banks’ lower risk tolerance contributed to the tightening for firms and consumer credit. Competition eased standards for housing loans, but risk perceptions led to further tightening for consumer credit.

For the first quarter of 2026, banks expect a moderate further net tightening of credit standards for firms, a slight tightening for housing loans, and a more marked 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 consumer credit, remaining unchanged for housing loans.

Loan demand increased slightly for firms (net percentage of 3%) and housing loans (net percentage of 9%), driven by demand for inventories, working capital, and improved housing prospects. Demand for consumer credit declined slightly (-2%).

In early 2026, banks expect a net increase in loan demand from both firms and households.

Access to retail funding and money markets deteriorated slightly in Q4 2025, but is expected to remain broadly unchanged in the next three months, with a slight easing in debt securities funding.

Banks reported a net increase in capital and liquid assets due to regulatory actions, with a temporary decline in risk-weighted assets. A net tightening impact from credit quality concerns was observed, with further tightening expected in 2026.

Credit standards tightened across sectors such as construction, wholesale and retail trade, manufacturing, and commercial real estate in H2 2025, with the strongest tightening in motor vehicle manufacturing. Expectations for H1 2026 include further tightening or stability across sectors, with increased loan demand in most sectors except for motor vehicles, wholesale and retail trade, and CRE.

Regarding trade policy uncertainty, nearly half of surveyed banks consider its impact important, leading to tighter credit standards and reduced demand, with similar expectations for 2026.

The survey was conducted between 15 December 2025 and 13 January 2026, with responses from 153 banks, all of which participated.

For more information, contact Benoit Deeg at +49 (0) 69 134495686.