There is once again an interesting study by the European Central Bank (ECB) on the subject of “Credit loan”. As part of the so-called Bank Lending Survey, more than 30 German banks were asked about their public procurement policies and their general lending behavior. The result of this study can be very aptly described with a simple sentence: stricter credit guidelines , yet increased demand for loans! Genoa thus developed the credit market for private customers in Germany during the first quarter of 2016.
Banks look more critically at lending
Loans to private households in Germany had been sharply tightened in the first quarter due to the tightening of credit standards by German banks. In particular, the procurement standards in the field of home finance were tightened. On balance, that means after subtracting all opposing statements, almost every fifth bank in this country reported having adjusted its guidelines accordingly. In the opinion of the ECB and the Deutsche Bundesbank, this result is attributable in particular to the Housing Credit Directive, which was transposed into national law on 21 March. This requires not only more comprehensive advice from the banks, but also a stricter credit check – that is, credit rating – of their customers.
Consumer credit is not as badly affected as housing loans
In contrast to residential mortgage loans, consumer lending standards were only marginally tightened, according to the institutions involved in the survey. The balance was only about three percent. It is interesting, however, that as a result of the tightened guidelines, no more requests for funding were rejected. This was, according to the banks, not the case for mortgage lending or consumer credit.
Higher demand for loans thanks to low interest rates
At the same time, German financial institutions recorded a significant increase in demand for loans in both areas. According to the surveyed banks, this is mainly due to the generally low level of interest rates, which will ultimately remain low as a result of the ECB’s current interest rate decisions in the coming months. In the case of consumer credit, the increased demand is certainly due to the increased consumer spending of German consumers, whereas in the case of residential mortgages, the expected rise in real estate prices should play a correspondingly important role. If you invest a property with expected value increase with a cheap loan, you will hardly find a better time than now.