Stricter terms borrowing for businesses and households are waiting for the banks of the eurozone in the second quarter of 2025, as uncertainties in the international environment intensify.
According to Banking Lending Survey in April 2025, which was carried out between March 10 and 25 March 2025 in 155 euro area banks, in the first quarter 2025 credit criteria for business loans became slightly stricter and the net loan demand was slightly in debt. Credit standards for mortgages have been relaxed and net loan demand continued to grow strongly.
In Greece, on the contrary, as the BoG funding research shows, the total terms of lending to businesses became more relaxed than in the fourth quarter of 2024, as the improvement of banks’ liquidity, the pressures of competition and the solvency of the borrowers contributed to the borrowers.
The total terms of mortgage lending were becoming stricter due to increases in loan charges out of interest, while the terms of consumer and other loans remained unchanged.
In the rest of the eurozone, while competition in mortgage loan markets remains high, estimates of credit risk and the deterioration of credit quality continue to borrow on businesses and consumers.
The euro zone banks reported in the first quarter of 2025 a small further net tightening of credit criteria – internal banks’ internal instructions or loan approval criteria – for loans or credit limits to businesses, a moderate loose -loose loan for loans to households for home markets, and other credit criteria. For the second quarter of 2025, banks expect further net tightening of credit standards in all three loan sectors.
In the first quarter of 2025, euro area banks reported a slight reduction in demand for loans or credit limits, after two quarters of patient recovery. The net demand for mortgages has continued to grow strongly, mainly due to the reduction of interest rates and, to a lesser extent, by improving the prospects of the housing market and higher consumer confidence.
Demand for consumer beliefs and other loans to households has increased moderately. For the second quarter of 2025, banks expect a slight net increased demand for business loans and further increases for households, especially for mortgages. It is noted that in Greece there was an increase in housing as a result of the “My Home II” program.