In the third quarter of 2025, euro area banks reported slightly tighter credit conditions and weak but slightly increasing loan demand. These findings emerge from the Bank Lending Survey (BLS) published by the European Central Bank (ECB) in October 2025, which provides a detailed analysis of credit supply and demand dynamics in a macroeconomic environment still characterised by significant risks and uncertainty.
Credit standards: an unexpected tightening
In the third quarter of 2025, euro area banks reported a small but unexpected net tightening of credit standards for loans and credit lines to enterprises (4%). In practice, banks applied slightly more stringent lending criteria, reflecting increased caution compared with the previous quarter.
As regards lending to households, credit standards remained broadly unchanged for loans for house purchase, while a moderate tightening was reported for consumer credit and other types of household loans.
Chart 1. Changes in credit standards applied to the approval of loans or credit lines to enterprises and contributing factors
Loan demand: slight increase, but still weak
Loan demand from enterprises showed a slight net increase in the third quarter of 2025 (+2%). However, despite this rise, overall demand remains weak by historical standards and below the expectations expressed by analysts in the previous survey round.
In essence, while some firms have resumed borrowing, the momentum is not sufficient to reverse a generally moderate underlying trend, partly linked to broader economic conditions and to firms’ own caution regarding investment and expansion plans.
Chart 2. Changes in demand for loans or credit lines to enterprises and contributing factors
Mortgages and loans to households
Another key finding of the survey is the strength of demand for residential mortgages (+28%), which continues to grow robustly. This reflects households’ persistent willingness to finance home purchases, even in a context of high borrowing costs and economic uncertainty.
At the same time, demand for consumer credit (+5%) remains more subdued, influenced by cautious perceptions regarding income and employment prospects.
Chart 3. Changes in demand for loans to households for house purchase and contributing factors
Outlook for the fourth quarter
Looking ahead to the fourth quarter of 2025, many banks expect credit standards to remain broadly stable for enterprises, with potential slight tightening for household lending other than housing loans. These expectations reflect a combination of still moderate economic conditions and banks’ cautious stance towards macroeconomic and geopolitical risks.
Why this survey matters
The ECB’s Bank Lending Survey is a key information tool providing qualitative indicators on credit standards and borrowing behaviour in the euro area. By combining quantitative data (such as volumes and interest rates) with banks’ assessments and perceptions, the BLS helps to better understand the transmission of monetary policy and financing conditions for households and firms.
In a global context marked by economic and geopolitical uncertainty, the net tightening of credit standards and weak demand for corporate loans highlight how the banking system is adopting a more cautious stance, reflecting perceived risks in the real economy and financial markets.
