Central Bank lending survey
The Central Bank conducts quarterly lending surveys among the four commercial banks. In the surveys, 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 July-16 August 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 been broadly unchanged in the past three months and will remain more or less unchanged in the coming six months.1 The banks noted an increase in household demand for mortgages in the past three months, as well as a marginal contraction in demand for motor vehicle loans. They expect developments to be similar in the next six months. According to the banks’ responses, their rules for lending to households have been unchanged in the past three months, but a slight tightening of mortgage lending rules is expected in the next six months. Competition for household loans is expected to increase in the next six months, both among the banks and among other credit market entities. The banks report that interest rates on inflation-indexed loans to households have risen slightly in the past three months, and they expect broadly the same trend in the six months ahead. Furthermore, they expect a slight rise in credit spreads on such loans. According to the banks’ responses, interest rates on non-indexed loans to households have fallen slightly in the past three months, as a result of a decline in the banks’ own funding costs. In addition, non-indexed rates are projected to keep falling in the next six months, owing to expectations of lower funding costs and a decline in the Central Bank’s key interest rate.
According to the banks’ responses, the supply of corporate credit has been unchanged in the past three months, but a slight increase in the supply of króna-denominated loans is expected in the next six months. The banks reported virtually unchanged corporate demand for credit over the past three months but expect a marginal increase in demand for króna-denominated loans in the six months ahead. The survey indicates that the banks’ rules on corporate lending have been eased slightly in the past three months and are expected to continue easing marginally in the next six months. Respondents also expect that competition among banks for loans to companies will increase in the next six months. Interest rates on loans to small companies rose marginally in the past three months, while credit spreads on loans to large firms narrowed. Changes in the banks’ funding costs were cited as factors in both cases. In the next six months, the banks expect their corporate lending rates to fall and credit spreads on loans to large companies to fall slightly as well. This is driven mainly by the banks’ expectations about both their own funding costs and the Central Bank’s key rate.
Further information here: Lending survey
1In the survey, loans to households are divided into three categories: residential mortgages, motor vehicle loans, and other loans. Loans to businesses are classified as either long-term or short-term loans. Furthermore, survey participants are asked about foreign-denominated lending to both households and businesses.