The latest survey among European banks shows that the ECB’s measures are having an effect. Both the demand for mortgages and the terms of the loans have broken the forecasts of the same entities at the beginning of the year, in the first case, because they have fallen more quickly and, in the second, because they have hardened suddenly
These conclusions are part of the ECB’s quarterly survey of bank loans carried out between 22 May and 6 April based on data received from each country. The Bank of Spain has been responsible for obtaining its data, in which few differences can be seen compared to the rest of the euro zone.
The conclusions at the European level is that there has been a “strong decline” in the demand for credit. 72% of Eurozone institutions have detected this trend, which is the highest percentage since this study began in 2003. In addition, loan conditions have deteriorated at an unknown speed since 2011.
In Spain, 90% of banks detected a decline in mortgage demand in the first quarter, which is the most important percentage among the large economies of the euro zone.
The results exceed those recorded in France, by 80%, and in Germany, by 75%, where, on the other hand, the rates of contraction have been seen since previous quarters.
Spanish banks also report that in the first quarter loan conditions continued to worsen for both individuals and companies, and they anticipate that access to financing will deteriorate even more in the second quarter. The tightening, says the Bank of Spain, is “generalized” and has been accumulating for four quarters.
These results have a meaning that transcends the banking activity itself. The ECB meets today to consider a possible interest rate hike beyond the current 3.5%, and the level of loan impairment is a sign that the cycle change in monetary policy is already underway effect
The forecast of analysts such as Nomura, Pimco and MFS is that the ECB will slow down rate hikes from today, because it will apply an increase of 0.25 points, up to 3.75%. He applies it in a context of a cooling of banking activity in which, despite this, inflation continues to be unbridled. In April it rose by a tenth compared to March in the euro zone, up to 7% year-on-year.
The Bank of Spain indicates that loans have tightened in the first quarters due to the “increase in risks perceived by financial institutions” and “less tolerance”. A significant factor in perceiving this tightening of credits is the percentage of rejected applications, which increased in all modalities.
