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ECB
policymakers are set to take stock of the economic situation at
a meeting on Thursday, paving the way for a decision in December
on the future of the central bank's bond-buying programmes.
The ECB's Bank Lending Survey painted an unchanged picture for
corporate borrowers but the bar was raised for households
looking for a home loan, who also faced less favourable mortgage
terms.
"For housing loans, the net tightening was related to banks’
risk tolerance and their cost of funds and balance sheet
constraints," the ECB said.
"In the fourth quarter of 2021, banks expect a further net
tightening of credit standards and, on balance, no change in
demand for loans to households for house purchase."
Some banks cited recommendations from "macro-prudential
supervisors" - whose job is to watch out for financial bubbles -
as a reason to tighten their criteria for granting home loans.
Among the euro zone's largest economies, approval criteria for
mortgages were tightened in Germany, Spain and France while they
remained unchanged in Italy.
Combined with rising demand, this resulted in a higher rejection
rate for German and French households who applied for home loans
last quarter, the survey showed.
Terms and conditions on mortgages - particularly the ratio
between the amount borrowed and the value of the property, the
duration of the loan and the additional charges - were also less
generous than in the previous quarter.
On the other hand, with the ECB's interest rates stuck at
rock-bottom, banks continued to shrink their margins, including
on loans considered risky.
"In the largest euro area countries, overall terms and
conditions for housing loans tightened in Germany and in France,
whereas they eased in Spain and Italy," the ECB said.
"The narrowing of margins in the euro area was driven by Spain
and France for average loans and by Italy for riskier loans,
while German banks reported a widening of all margins," it
added.
The ECB is widely expected to wind down its Pandemic Emergency
Purchase Programme in March but continue running its smaller,
regular bond-buying scheme beyond that date.
The euro zone's central bank has stuck to its line that the
recent rise in inflation is mostly temporary and price growth,
which hit 3.4% in September, will ease back below its 2% goal
next year.
(Reporting By Francesco Canepa; Editing by Christina Fincher)
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