The Central Bank conducts quarterly lending surveys among the four commercial banks. In the surveys, the banks are asked for their assessment of developments in demand for credit; the factors that, in their opinion, had a decisive impact on supply in the previous three months; and their expectations for the coming six months. The results of the most recent survey, conducted during the period 2-14 January 2025, are based on the average of the commercial banks’ responses.

Survey question #8, which asks about developments in banks’ lending rates, among other things, has been changed. In order to gain a clearer view of developments in interest rates and expectations about them, corporate loans are now divided into three categories: price-indexed, non-indexed, and foreign-denominated. Previously, the question made no such distinction, but interest rates on the various loan forms have developed in divergent ways recently.

Highlights

The survey results indicate that the commercial banks’ supply of mortgage loans to households has contracted slightly in the past three months but is expected to remain unchanged in the coming six months.1 The banks detected a marginal decline over the past three months in households’ demand for mortgages, car loans, and other loans not backed by real estate. However, they expect a slight increase in demand for mortgages and car loans in the next six months. According to the banks’ responses, their mortgage lending rules have grown tighter in the past three months and are expected to tighten further in the six months ahead. The banks cite access to market funding and management of interest rate and indexation imbalances as reasons for tighter lending rules. Competition for household loans is expected to increase somewhat in the next six months, vis-à-vis both other banks and other credit market entities. Interest rates on index-linked loans to households have risen in the past three months, but interest premia have fallen slightly, according to the banks’ responses. The main drivers of the increase are the banks’ funding costs and a rising real policy rate, while nominal policy rate cuts have had a downward impact. The banks expect interest rates on indexed household loans to fall in the next six months, as they assume that the Central Bank’s key interest rate and their own funding costs will decline, whereas they cite expectations of an unchanged real policy rate as an upward driver. Interest rate spreads on indexed loans are expected to widen marginally during the period. Interest rates on non-indexed household loans have fallen in the past three months, according to the survey, and all participants expect a continued decline in the six months ahead. The main drivers are Central Bank rate cuts and a reduction in funding costs, both of which are expected to continue in the next six months.

The banks state that the supply of corporate credit has been unchanged in the past three months, but they expect it to increase slightly in the next six months. Among small and large companies alike, demand for corporate loans has picked up slightly in the past three months. This is expected to continue over the six months to come. The survey indicates that the banks’ rules on corporate lending have not changed in the past three months and are not expected to change in the next six months. The banks also expect competition for loans to companies to increase marginally in the next six months vis-à-vis other banks, non-bank lenders, and from market funding. According to the banks’ responses, interest rates on index-linked loans to small companies have risen in the past three months, mainly because of higher funding costs, although they also mention a rising real policy rate as a contributing factor. On the other hand, the banks expect indexed lending rates to small firms to decline marginally in the coming six months, owing to expectations of Central Bank rate cuts and lower funding costs. Nevertheless, they expect the regulatory environment and an unchanged real policy rate to mitigate the decline. The banks state that interest rates on indexed loans to large firms have eased slightly in the past three months but are expected to hold unchanged in the six months ahead. They also state that interest rates and interest premia on non-indexed loans to small and large companies have declined in the past three months and are expected to keep falling in the next six months. The main drivers of the decline are a lower policy rate and reduced funding costs, while the regulatory environment pulls in the opposite direction. According to the banks’ responses, interest rates and interest premia on foreign-denominated loans to both small and large companies have fallen as well. This is due primarily to reduced funding costs, although a lower policy rate is also a factor. The banks expect interest rates and premia on these loans to remain unchanged in the six months ahead, as lower funding costs and the regulatory environment offset one another.

See further information here: Lending survey.

1) In the survey, loans to households are divided into three categories: residential mortgages, motor vehicle loans, and other loans. Loans to businesses are classified as either long-term or short-term loans. Furthermore, survey participants are asked about foreign-denominated lending to both households and businesses