Eurozone businesses' demand for loans remained strong in the last three months of 2006 but demand for household mortgages continued to weaken, the European Central Bank said today.
Credit standards for business loans were largely unchanged from the third quarter of 2006, but banks eased their credit standards for mortgages and consumer credit, the ECB said in its quarterly survey of euro zone banks.
"Banks continued to report a strong positive net demand for loans to enterprises in the fourth quarter of 2006, up from the previous quarter," the ECB said.
Looking forward, banks said they expected strong business demand for loans to continue in the first three months of 2007, and for credit standards to remain similar, though with some easing for loans to smaller firms. Consumer borrowing gave a weaker picture than the corporate sector, however.
"Net demand for consumer credit remained positive, although it decreased somewhat from the previous quarter. During the same period, net demand for housing loans to households, as perceived by the banks, continued to decline and was more negative than in the third quarter," the ECB said.
Banks expected a further decline in mortgage demand in early 2007, and a further easing of credit standards for both mortgages and consumer credit.
But demand for consumer loans should improve in the first quarter of 2007, banks said. Eighty-five euro zone banks, selected to be representative of the 13-member bloc, took part in the survey, responses to which had to be submitted by January 16th.