The survey that does not fail is the one that the ECB carries out every quarter among 158 European banks about credit conditions and consumer demand. On this occasion, the survey carried out between the end of June and the beginning of July shows a historic drop -in this case, the story begins in 2003- in the euro zone in the request for loans by companies and, in the Spanish case, a continued tightening of credits, with the added forecast that the trend will continue in the third quarter.
The forecast of Spanish banks is that "for the second half of this year the supply of credit will continue to contract and there will be a new general decline in loan applications, which would be somewhat more intense in real estate activities." However, the deterioration will be more moderate than in the first half, when banks found the market performing worse than they had predicted.
Among Spanish banks, 60% detected a deterioration in demand for home purchases in the second quarter, a percentage higher than the average for the euro zone, 47%, but below the 70% detected in France or 64% in Italy. In Spain, in the first quarter of the year, 90% of the entities reported the decline in demand, which continues to decline, but with less intensity. In business and consumer loans the trend is similar.
The Bank Loan Survey already chains five consecutive quarters of worsening conditions for granting loans due to the "increase in perceived risks", "a lower tolerance for them" and the "increase in financing costs for entities" itself. The consequence has been lower demand for loans, this time for two consecutive quarters.
The cause that explains all these movements to a greater extent is the ECB rate hikes, which have gone from 0% in July of last year to 4% today. The Bank of Spain indicates that, if the demand for mortgages has fallen among consumers, it has also been due to the greater use of savings and the worse prospects for the housing market. If it has done so among companies, it is partly due to lower investment.
For the ECB, the novelty is not so much in the worst conditions as in the response of consumers. The "sharp drop" in the euro zone during the second quarter in the demand for loans by companies stands out in the survey's conclusions, the largest since 2003. The drop was "substantially higher than expected by banks in the previous quarter."
The decline in demand for housing in the euro zone remained "strong" in the second quarter, but below what occurred in the previous quarter and in line with what was forecast by the banks themselves. "The drop in the second quarter is relatively close to the value expected by the banks in the previous quarter," he says.
The percentage of loan applications that, due to the prudence of the entities or the recklessness of the consumers, the banks decide to reject, has also increased. Denials, indicates the ECB, are more frequent in SMEs compared to large companies and continue to increase in real estate loans, although with less intensity.
