Lending in the euro area is coming under increasing pressure. According to the Bank Lending Survey published by the European Central Bank on Tuesday, banks further tightened their credit standards for companies in the third quarter of 2026.  Net nine percent of the banks surveyed reported stricter lending standards for corporate loans, up from seven percent in the previous quarter. The tightening was therefore stronger than the institutions had expected.

The main reasons were higher credit risk, lower risk appetite, and geopolitical uncertainty. Small and medium-sized enterprises were particularly affected.

Loan demand turns negative

On the demand side, there has been a clear shift in trend. The balance of banks reporting rising versus falling demand for corporate loans fell from plus three percent in the second quarter to minus six percent. Until recently, banks had expected demand to increase. In fact, higher interest rates and weaker investment appetite weighed on borrowing in particular.

There are also country-specific differences. The tightening of credit standards was especially pronounced in France. There, a net 27 percent of institutions reported stricter requirements, compared with six percent in Germany. In Italy, by contrast, standards were eased, while they remained unchanged in Spain.

Mortgage demand at a three-year low

The slowdown is even more pronounced in real estate financing than in corporate lending. Demand for mortgages fell in the third quarter at the sharpest pace since 2023. The corresponding demand balance deteriorated from minus 15 to minus 27 percent. Banks had expected only minus twelve percent. In Germany, the balance fell to minus 37 percent, and in Spain to minus 40 percent. France reported minus 25 percent, while demand in Italy remained stable.

Although the actual lending standards for mortgages in the euro area as a whole remained unchanged, contractual lending conditions deteriorated. A net 16 percent of banks reported a tightening, the highest reading since the third quarter of 2023. For the final quarter, institutions expect mortgage demand to decline further. The projected balance stands at minus 36 percent.

Consumer loans are also being granted more restrictively

For consumer loans, the tightening has continued without interruption since the second quarter of 2022. In the third quarter, a net 14 percent of banks reported stricter credit standards, up from twelve percent in the previous quarter. Rejection rates rose for both companies and households. This was particularly evident in consumer loans.

At the same time, banks' refinancing worsened. According to the ECB, access to customer deposits was assessed as difficult as never before since this survey began in 2011.

AI is creating new loan demand

Alongside the decline in traditional lending, the survey also points to a new growth area: financing infrastructure for artificial intelligence. Several banks expect gradually rising demand for loans for data centers and other digital infrastructure. Financing is increasingly concentrated on infrastructure operators rather than software developers or companies that merely use AI. However, most banks still do not have special lending criteria for AI-related investments.

Digital assets are gaining importance

For the first time, the ECB also asked about the impact of digital assets on banking. These include cryptocurrencies, stablecoins, and tokenized financial instruments. For the past twelve months, banks reported only limited effects. Looking ahead to next year, however, a net twelve percent of institutions expect a positive impact from digital assets on their business strategy, compared with just two percent in the backward-looking assessment. At the same time, they expect a slightly negative impact on traditional deposit business.

The results are based on responses from 159 banks in the euro area. The survey was conducted between September 21 and October 6, 2026. The figures refer exclusively to the euro area and cannot be transferred to the Swiss credit market.