28 April 2023

Central Bank lending survey

In 2022, the Central Bank began conducting quarterly lending surveys among the four commercial banks. In the surveys, the banks are asked for their assessment of developments in credit supply and demand; the factors that, in their opinion, had a decisive impact on supply in the past three months; and their expectations for the coming six months.

The most recent survey was conducted during the period 3-14 April 2023. The results of that survey presented here are based on the average of the commercial banks’ responses.

The survey results indicate that the commercial banks’ supply of household mortgage loans has not changed in the past three months and that participants expect it to remain unchanged in the next six months. On the other hand, they report reduced demand for mortgage loans and a small contraction in demand for motor vehicle loans over the past three months. Respondents also expect demand for both mortgages and car loans to decline over the next six months. The commercial banks have slightly tightened their lending rules (credit standards) for mortgages and other household loans in the past three months. 1) The banks’ liquidity and access to market funding were the main drivers of the shift, although the housing market situation and outlook were factors as well with respect to mortgage lending rules. Furthermore, general economic developments and prospects affected rules for other household loans. The banks also expect to tighten their rules on household loans further in the next six months. Interest rates on both indexed and non-indexed household loans rose over the past three months, owing to the increase in the Central Bank’s key rate and to rising funding costs, and the banks expect them to keep climbing over the next six months.

The survey results suggest that the supply of corporate loans has declined marginally in the past three months and will shrink further in the coming six months, particularly in the case of foreign-denominated loans. Among small companies, demand for loans appears to have held broadly unchanged in the past three months, while among large companies it has contracted slightly. The banks expect demand for corporate loans to start declining in the coming six months. Credit standards for corporate loans have been unchanged in the past three months and are expected to remain unchanged over the next six months as well. Respondents expect competition for loans to large companies to decline in the coming six months. Corporate lending rates rose in the past three months, owing to the increase in the Central Bank’s key rate and higher funding costs. The banks expect rates to keep rising over the next six months, and for the same reasons, although changes in competition and the regulatory framework are factors as well.

See further: Lending survey

1)In the survey, household loans are broken down into residential mortgages, motor vehicle loans, and other loans. Loans to businesses are broken down into long-term loans and short-term loans. Furthermore, foreign-denominated loans are reported separately.