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Biggest tightening in loans to firms since 2011
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Drop in demand for mortgages is sharpest on record
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ECB meets on Thursday to set path for rates
(Adds detail from survey)
FRANKFURT, Jan 31 (Reuters) - Euro zone banks have
tightened companies' access to credit by the most since the 2011
debt crisis and expect to continue doing so as they turn more
pessimistic on the economy amid rising borrowing costs, a
European Central Bank survey showed on Tuesday.
But demand for loans from enterprises and households also
fell for the same reasons, with the drop in demand for mortgages
the biggest on record, the ECB's quarterly Bank Lending Survey
showed.
The results showed the ECB's steady diet of interest rate
hikes, which began in the summer, was taking its toll on the
economy, and they may play into the hands of policymakers
arguing for smaller rate hikes in the coming months at a meeting
on Thursday.
A net 26% of banks polled by the ECB said they made their
standards stricter for approving loans to companies in the final
quarter of last year, the biggest tightening since 2011.
Banks also restricted access to consumer credit and
mortgages, a trend that banks expect to continue this quarter.
"Risks related to the economic outlook, industry or firm-specific situation and banks’ risk tolerance continued to have a tightening impact on credit standards," the ECB said. The central bank for the euro zone has been battling the briskest inflation in decades, the result of higher energy costs but also the reopening of the euro zone's economy after the COVID-19 pandemic.
This was putting households off taking out credit to buy consumer goods or property. A net 74% of banks reported falling demand for mortgages in the last quarter, with the biggest drops seen in Germany and France.
"This highlights a strong negative impact of recent interest rate increases on housing loan demand, coupled with declining consumer confidence," the ECB said. (Reporting By Francesco Canepa; editing by Balazs Koranyi and Jason Neely)
004906975651247; Reuters Messaging: francesco.canepa.thomsonreuters.com@reuters.net))