The ECB reported its Q2 bank lending survey results today and there was much good news. Banks eased their lending standards for the first time since in seven years and the net land demand improved in all categories. Even though the ECB acknowledged that lending standards remain “relatively tight”, the modest relaxation is a welcomed development. That the tightening of credit standards ended and banks reported a small overall increase in risk-weighted assets may suggest that at least some banks have completed their de-leveraging.
The Great Graphic here comes from the ECB and was tweeted by Frederik Ducrozet. It shows the change in credit standards (CS) and loan demand (DEM) for the past two surveys, by type of loan (enterprise, house purchase and consumer credit) for the euro area as a whole and a number of countries. The red-circled data points reflect Ducrozet’s assessment of some “strange patterns”. They involve mostly the strength of demand for mortgages and consumer credits. He also questions the change in credit standards in Italy for business and mortgage lending.Â
