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ECB BLS: Credit Standards Tighten for Firms and Consumers in Q4 2025, Further Tightening Seen in Q1 2026

3 February 2026

ECB BLS: Credit Standards Tighten for Firms and Consumers in Q4 2025, Further Tightening Seen in Q1 2026
Photo of the Illumination of the ECB Building for the Europe Day 2025 in Frankfurt on May 8, 2025. Photo by the ECB.

By Marta Vilar – MADRID (Econostream) – The European Central Bank’s latest Bank Lending Survey (BLS), released on Tuesday, showed that banks tightened credit standards for firms and consumer lending in Q4 2025, while reporting a slight net easing of standards for household mortgages.

Banks in the euro area “reported an unexpected net tightening of credit standards (banks’ internal guidelines or loan approval criteria) for loans or credit lines to enterprises in Q4 2025,” said the ECB in a press release.

According to the ECB, the net tightening for firms followed a smaller tightening in the previous quarter and exceeded banks’ expectations reported in the prior survey.

The tightening of credit standards for enterprises was driven by banks’ concerns about the outlook for companies and the global economy, as well as by a decline in banks’ risk tolerance, the press release said.

“Banks indicated a small net easing of credit standards for housing loans, which they had not expected, and a further net tightening of credit standards for consumer credit, which was above the expectations they reported in the prior quarter,” the ECB said.

For housing loans, competitive pressures contributed to the easing of credit standards, while risk perceptions had a tightening effect, according to the survey. The tightening of standards for consumer credit was mainly driven by banks’ lower risk tolerance and higher risk perceptions.

Looking ahead, banks expect a moderate further tightening of credit standards for consumer credit in Q1 2026, the ECB said, alongside a slight tightening for housing loans and a more pronounced tightening for loans to firms.

Loan demand from firms registered a small net increase in Q4 2025, according to the BLS, while demand for housing loans rose more moderately than previously and demand for consumer credit declined slightly. Banks expect loan demand from both firms and households to increase on a net basis in Q1 2026.