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Central Bank lending survey

The Central Bank conducts a quarterly lending survey among the four commercial banks. In the survey, the banks are asked for their assessment of developments in demand for credit; the factors that, in their opinion, had a decisive impact on supply in the previous three months; and their expectations for the coming six months. The results of the most recent survey, conducted during the period 1-15 April 2024, are based on the average of the commercial banks’ responses.

Highlights
The survey results indicate that the commercial banks’ supply of mortgage loans to households has increased slightly in the past three months but will remain unchanged in the coming six months.¹  The banks observed a reduction in demand from households in the previous three months and expect a continued decline in the six months to come. According to the banks’ responses, their rules for lending to households have been broadly unchanged in the past three months and are likely to remain unchanged overall in the next six months. They also expect competition for household lending to increase marginally in the next six months. According to the bank’s responses, interest rates on indexed loans to households have been largely unchanged in the past three months and are likely to remain broadly steady in the upcoming six months. The banks reported that interest rates on non-indexed loans had fallen slightly in the previous three months, owing to reduced funding costs themselves. They also expect their non-indexed lending rates to keep falling in the next six months, owing to expectations of reduced funding costs and a lower Central Bank policy rate.

According to the banks’ responses, their supply of corporate credit has been unchanged in the past three months and is expected to remain unchanged in the next six months. The banks detected slightly stronger demand for króna-denominated corporate loans over the previous three months, and they expect a continued marginal increase in the six months ahead. The survey indicates that the banks’ rules on corporate lending have not changed in the past three months and are not expected to change in the next six months. The banks also expect competition for loans to companies to increase in the next six months. Interest rates and interest premia on loans to companies were unchanged in the previous three months, according to the survey results; however, the banks expect interest rates to fall in the next six months, owing to expectations about their own funding costs and Central Bank rates.

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