European banks tighten credit for businesses and households in the second quarter of 2026

7% of eurozone banks tightened their loan conditions for businesses between April and June. Demand for mortgage credit fell by 15%.

Eurozone banks have tightened their grip on businesses and families again. According to the ECB's bank lending survey (BLS) published on July 21, a net 7% of entities tightened their credit granting criteria for businesses in the second quarter of 2026. This percentage is lower than the 19% that the banks themselves had anticipated, but the trend remains restrictive.

More restrictions for mortgages and consumer loans

The tightening was even more pronounced in loans to households. A net 9% of banks reported tougher conditions for mortgages, and a net 12% for consumer credit. The perception of higher risk and the lower risk tolerance of the entities explain this shift, according to the ECB. Geopolitical and energy uncertainty continues to weigh on banks' decisions.

The automotive sector and energy-intensive manufacturing were the most affected by the credit restriction. Banks also raised the interest rates applied and tightened the contractual conditions across all segments.

Credit demand cools, except for businesses

Demand for business loans rose slightly: a net 3% of banks observed an increase, compared to the 10% drop they expected. Companies requested more credit for inventories and working capital, as well as to refinance debt. However, the ECB warns that the outlook remains mixed and depends on geopolitical developments.

In contrast, mortgage demand plummeted by a net 15%, although the drop was less than expected (20%). Consumer confidence and the evolution of interest rates were the main burdens. The worsening of the real estate market outlook also weighed heavily. Demand for consumer credit barely changed (-2% net), but with a negative tone.

More rejected applications

The percentage of rejected loan applications increased across all segments, especially in consumer credit. Banks anticipate a further tightening of conditions in the third quarter of 2026 for all types of loans.

For Spanish companies, this translates into greater difficulties in obtaining financing, especially in sectors most exposed to energy and automotive. Families seeking a mortgage will face higher rates and more stringent requirements. The ECB recommends that applicants compare offers and negotiate terms before signing.