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Euro area banks report tighter credit standards in Q2 2026

The ECB said loan terms tightened across all segments, mainly due to higher interest rates, and banks saw more rejected applications, especially for consumer credit.

Reported · Written up by our desk · Central Banks

Euro area banks reported a moderate net tightening of credit standards for lending to enterprises in the second quarter of 2026, with net 7% of banks tightening internal guidelines or loan approval criteria, according to the ECB's July 2026 bank lending survey.

The survey also showed net tightening for household lending, with standards tightened for house purchase loans (net 9%) and for consumer credit and other household lending (net 12%). For firms, the tightening was less severe than banks had expected in the previous survey round, when the net tightening was 19%.

ECB analysis attributed the tightening mainly to banks' higher perceived risks to the economic outlook and lower risk tolerance, with banks remaining highly attentive to risks linked to geopolitical and energy developments. For the third quarter of 2026, banks expect credit standards to tighten further across all loan categories.

The ECB said overall terms and conditions tightened for all loan segments, driven mainly by higher interest rates, and banks reported a net increase in the share of rejected loan applications across borrower groups, with the increase higher for consumer credit than for loans to firms and housing loans. On the demand side, banks reported a slight net increase in demand for loans to firms (net 3%), while demand for housing loans declined markedly (net -15%).

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