Banks lending more freely to households: ECB

2 min

Frankfurt am Main (AFP)

Eurozone households enjoyed easier access to credit in the third quarter of 2017, the European Central Bank said Tuesday, while lending conditions for businesses were broadly unchanged.

A loosening of the standards banks use to judge creditworthiness "continued for all loan categories" as banks jostle to attract borrowers at a time of record-low interest rates and easy access to cheap credit.

The ECB closely watches lending data to gauge the effectiveness of its ultra-loose monetary policy, which aims to bolster growth and inflation in the single currency area by encouraging spending and investment.

A quarterly survey of 141 banks found that lenders eased requirements for businesses by 1.0 percent, a slight slowdown from the 3.0 percent loosening seen between April and June.

But creditworthiness standards were 11 percent looser for mortgages, a bigger change from the previous quarter's 4.0 percent. The ECB said the loosening "was stronger than expected".

Credit standards on consumer credit and other lending to households also eased, the ECB added.

Looking ahead to the final quarter of 2017, the surveyed banks said they expected credit standards to remain roughly unchanged for businesses, although households and consumers could look forward to further easing.

Demand for loans meanwhile continued to rise across all categories between July and September, the ECB said, powered by the "low general level of interest rates" while mortgage borrowing was boosted by "favourable housing market prospects".

The ECB has set interest rates at record lows, offers cheap loans to banks and buys up billions in government and corporate bonds each month in a bid to pump cash into the economy and push up inflation towards its goal of just under 2.0 percent.

Although inflation remains stubbornly low, ECB president Mario Draghi is expected to announce on Thursday that the bank will begin winding down its massive bond purchases from next year as the eurozone recovery gathers pace.