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 past three months; and their expectations for the coming six months. The results of the most recent survey, conducted during the period 1-15 January 2024, are based on the average of the commercial banks’ responses.
Highlights
The survey results indicate that the commercial banks’ supply of loans to households has been unchanged in the past three months but that the supply of motor vehicle loans will increase slightly in the coming six months.1 The results also suggest that household demand for mortgages has contracted in the past three months; furthermore, the banks expect household demand for credit to ease slightly overall in the next six months. According to the commercial banks’ responses, their rules on motor vehicle loans for households have been tightened marginally in the past three months, while other lending rules have remained unchanged. The banks also expect their rules to remain broadly unchanged over the next six months. Competition from other banks and non-bank lenders for loans to households is projected to increase slightly in the coming six months. Interest rates on inflation-indexed household loans rose over the past three months, owing to the increase in the Central Bank’s key rate and to higher bank funding costs. The banks also expect a minor increase in inflation-indexed interest rates over the next six months, due to rising funding costs. Interest rates on non-indexed household loans remained unchanged, on average, over the past three months, and are not expected to change in the upcoming six months.
The results indicate that the supply of credit to companies has been unchanged in the past three months and will remain unchanged in the coming six months. According to the banks’ responses, corporate demand for short- and long-term loans increased marginally over the past three months. The banks expect demand for króna-denominated corporate loans to keep growing in the next six months. The banks’ lending rules for loans to companies 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 marginally in the next six months, owing to an increase in market-based financing. Interest rates and credit spreads on corporate loans have risen in the past three months, owing both to the increase in the Central Bank’s key rate and to rising funding costs faced by the banks, but the survey suggests that interest rates on loans to large companies will decline slightly in the next six months for the same reasons. Interest rates and credit spreads on other corporate loans will not change, however.
1 In the survey, loans to households are divided into three categories: residential mortgages, motor vehicle loans, and other loans. Loans to businesses are classified as long-term or short-term loans. The banks are also specifically asked about foreign-denominated loans to both households and businesses.
See further information: Central Bank lending survey.