The July edition of the Credit Market Survey by the Bank of Portugal (BdP), published today, includes an overview of the second quarter and presents forecasts for July to September.
The survey results, which assess supply and demand for the second quarter compared to the previous three months, indicate an “increase in demand particularly in the housing segment” among individuals.
This rise in demand was driven by the general level of interest rates and, to a lesser extent, consumer confidence and the regulatory and fiscal regime of the housing market.
In consumer and other loans, consumer confidence slightly contributed to an increase in demand.
For companies, there was a “slight increase” in demand from small and medium-sized enterprises (SMEs) and for short-term loans, while large companies saw a slight reduction in credit demand.
For the third quarter, the BdP anticipates a “slight increase in loan demand from SMEs, across loan maturities, and from individuals for housing.”
On the supply side, credit granting criteria remained virtually unchanged for business loans, became less restrictive for housing loans, and “slightly more restrictive for consumer and other loans.”
According to the survey conclusions, in housing credit, competition from other banking institutions and borrowers’ credit quality “slightly contributed to less restrictive criteria,” although the latter resulted in more restrictive criteria for consumer and other loans.
Among companies, although not enough to impact the criteria, risks related to the situation and general economic prospects slightly increased the restrictiveness for SMEs.
In the analysis of credit terms and conditions, for both SMEs and large companies, as well as housing credit, there was a slight reduction in the interest rate and the spread applied to medium-risk loans, while conditions for consumer and other loans remained unchanged.
The proportion of rejected loan applications remained unchanged for companies and slightly increased for individual loans, both in housing and consumer and other loans.
For the third quarter, Portuguese banks anticipate “slightly less restrictive credit granting criteria for SMEs” and “no significant changes for large companies and individual credit.”
