Central Bank lending survey
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 1-15 October 2024, are based on the average of the commercial banks’ responses.
Highlights
The survey results indicate that the 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. The banks have discerned a considerable downturn in household demand for motor vehicle loans in the past three months, as well as a slight decline in demand for other non-mortgage loans. They expect demand for other non-mortgage loans to develop similarly in the next six months, but they anticipate a marginal increase in demand for mortgages. According to the banks’ responses, their mortgage lending rules have been tightened slightly in the past three months and are expected to keep doing so over the next six months. They cite costs due to their capital position, access to market funding, and liquidity position as the reasons for tighter lending rules. Competition for household loans is expected to increase in the next six months, both among the banks and vis-à-vis other credit market entities. The banks note that interest rates on inflation-indexed loans to households have risen in the past three months, mainly because their own funding costs have increased. They also cite the regulatory framework and stiffer competition as factors contributing to the rise in inflation-indexed interest rates. Developments are expected to be similar over the next six months, but in addition to rising funding costs and a tighter regulatory framework, movements in the Central Bank’s key rate are also cited as a driver of higher inflation-indexed interest rates. Interest rates on non-indexed loans to households have fallen slightly the past three months, however, and the banks anticipate further declines in the coming six months, owing to expectations of Central Bank policy rate cuts.
According to the banks’ responses, the supply of corporate credit has been unchanged in the past three months, but a slight increase is expected in the next six months. The banks reported virtually unchanged corporate demand for credit over the past three months but expect demand to grow in the next six months, particularly among large companies. 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. Respondents also expect that competition for corporate loans will grow marginally in the next six months. The banks’ responses suggest that overall, interest rates on loans to large companies have fallen slightly over the past three months, owing to a lower policy rate. Interest rates on loans to small companies have held broadly unchanged, however, as higher funding costs have offset the effects of a lower Central Bank rate. The banks expect rates on loans to both small and large companies to fall in the next six months. This is driven mainly by expectations about the Central Bank’s key rate and the banks’ own funding costs. Comments were received from the banks concerning Question #8 in the survey, which asked about developments in corporate lending rates. No distinction is made by type of loan, but rates on inflation-indexed, non-indexed, and foreign-denominated loans have developed in different ways in recent months. The survey results must therefore be examined with the proviso that developments in interest rates on various types of loans could offset one another.
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.