Credit Standards Tightened

Mon, 08 Oct 2007

Businesses and householders will find it harder getting loans in the wake of the US subprime mortgage crisis, a European Central Bank (ECB) survey has confirmed. The survey shows that Euro-zone banks tightened credit standards following the credit crisis, and are expected to tighten them further in the next quarter.

The ECB released its third quarter Bank Lending Survey a month earlier than usual given the exceptional circumstances at present, meaning it encompasses the third quarter up until September 27th. The survey suggests that householders may have difficulty in getting mortgages given the tightening of credit standards in the third quarter, whilst standards are set to be tightened yet further in the fourth quarter.

It is not just householders that will be affected by the credit crisis, with the survey showing a third quarter trend of large firms finding it harder to get loans for corporate restructuring, mergers and acquisitions . As with householders, firms are likely to find it no easier to get loans in the fourth quarter, with credit standards set to be tightened again.
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