According to the results of the latest Bank Lending Survey for the second quarter of 2008, adjustments in the lending behaviour of the institutions surveyed remained very limited. In addition, to the extent that credit supply conditions were tightened, they were tightened to a significantly lesser extent in Germany than in the euro area as a whole.

On balance, the participating German institutions’ credit standards for corporate lending business as a whole remained practically unchanged. Only loans to large enterprises were subject to somewhat stricter standards than in the previous quarter. At the same time, the banks surveyed continued to widen their margins on corporate loans across the board, albeit at a markedly slower pace. The demand for borrowing also continued to increase.

By contrast, there tended to be more generous lending conditions for loans to households in the second quarter. In particular, the German banks participating in the Bank Lending Survey eased their credit standards for and margins on loans for house purchase – mainly for competitive reasons – whereas lending terms for consumer credit barely changed. While the survey respondents reported a decline in the demand for loans for house purchase, consumer credit demand stagnated.

The participating institutions expect a slight tightening in their credit standards for loans to enterprises and consumer credit in the third quarter of 2008. By contrast, they forecast largely unchanged credit standards for housing loans.

The July survey again contained additional questions on the effects of the financial market turmoil on the lending behaviour of the banks surveyed. The responses essentially confirmed the results of previous surveys, which pointed to a somewhat restrictive influence of refinancing conditions, in particular, on lending standards. The respondents expect to see a similar effect in the coming quarter.

The aggregate survey results for Germany can be downloaded.