According to the July 2024 euro area bank lending survey (BLS) euro area banks reported a small further net tightening of their credit standards – i.e banks’ internal guidelines or loan approval criteria – for loans or credit lines to enterprises in the second quarter of 2024 (net percentage of banks of 3%; Chart 1). Banks reported a moderate further net easing of their credit standards for loans to households for house purchase (net percentage of -6%), whereas credit standards for consumer credit and other lending to households tightened moderately further (net percentage of 6%). This was broadly in line with the trend over recent quarters and with banks’ expectations. Banks’ risk tolerance was the main driver behind the net tightening for loans to firms. Risk perceptions were less relevant than during the rate hiking cycle, but continued to exert tightening pressure across all loan categories. Competition contributed to an easing of credit standards for housing loans. For the third quarter of 2024 banks expect a moderate net tightening for loans to firms and unchanged credit standards for loans to households.
Banks’ overall terms and conditions – i.e. the actual terms and conditions agreed in loan contracts – eased for housing loans and eased very slightly for loans to firms, while there was a small tightening for consumer credit. Lending rates were the main driver of the net easing in terms and conditions for housing and corporate loans, while margins on riskier loans largely drove the tightening in terms and conditions for consumer credit.