Between July and September, banks restricted the supply of credit and raised interest rates on new loans. For the last quarter, they expect to moderately tighten criteria for households.
Between July and September, financial institutions restricted the supply of credit in Spain, according to the Bank Lending Survey published quarterly by the Bank of Spain. The information, reported by elconciso.es, indicates that the general conditions for new loans tightened for both companies and households.
The main change was the increase in interest rates. According to the report, banks passed on the rise in their funding costs, without it affecting margins:
“it was a consequence of banks passing on the increase in their funding costs, without it affecting margins”
In household credit for consumption and other purposes, institutions noted a “slight tightening” of granting criteria due to increased perceived risks. In contrast, criteria for financing companies and for home purchases remained stable.
Credit demand fell across all three segments. In financing for companies, the decline only affected SMEs, while demand from large companies increased slightly. The drop was more pronounced in loans for purchasing homes. The Bank of Spain attributes the decline to high interest rates and, in the case of mortgages, to “the worst outlook for this market”.
Looking ahead to the last quarter of the year, the surveyed banks expect to moderately tighten criteria for granting loans to households. In financing for companies, they expect criteria to remain unchanged. They anticipate further declines in demand across all three segments.
The report also includes a voluntary question about the impact of artificial intelligence on the financial situation and credit policy of the institutions. According to the responses, this technology has had little influence on demand or credit granting, except for some financing to build data centres.
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