Key facts
- A net 27% of banks reported a decrease in demand for housing loans in the third quarter.
- Increases in interest rates were the main driver of the decline, followed by falling consumer confidence and worsening housing market prospects, the ECB said.
- Banks expect to tighten lending standards for all loan types in the final three months of the year.
Demand for mortgages in the euro zone fell sharply in the three months to September as interest rates rose and credit became harder to get, a European Central Bank poll showed on Tuesday. The ECB's quarterly Bank Lending Survey indicated the impact of the central bank's policy tightening, which began in June to combat inflation. A net 27% of banks reported a decrease in demand for housing loans in the third quarter, a more pronounced decline than lenders had expected and reported in the previous three months. Increases in interest rates were cited as the main driver, followed by falling consumer confidence and worsening housing market prospects. Banks expect to tighten standards for all types of lending in the last three months of the year. France saw the most pronounced tightening among large European countries.