Demand for residential mortgages continues to rise; fall in SME credit demand comes to a halt

Statistical News Release
Date 30 July 2015

Dutch banks reported further increases in demand for residential mortgage loans in the second quarter of 2015. This means that the pick-up in demand first observed in the first quarter of 2014 is accelerating. With regard to corporate loans, this was the first time in over six years that the banks did not report a fall in demand from small and medium-sized enterprises (SMEs). Furthermore, an increase in credit demand from large enterprises was reported.This is revealed by the ECB’s latest quarterlyBank Lending Survey.This survey provides qualitative information about lending by banks established in the Netherlands to households and businesses in the euro area and the banks’ credit standards.

Demand for residential mortgages rises further

All banks participating in the survey reported an increase in demand for residential mortgage loans in the second quarter of 2015 (Chart 1). The improved outlook for the residential market, increased consumer confidence, and low interest rates are all mentioned to have contributed to this increase. Banks with an aggregate market share of 77% expect demand to pick up further in the third quarter of 2015.

Chart 1 - Changes in demand for residential mortgage loans

 

The banks participating in the survey indicated they had not changed their credit standards on residential mortgage loans. The last time that banks on balance reported an easing of their credit standards was in the first quarter of 2008.

Decline in credit demand from SMEs comes to a halt

Dutch banks did not report a change in demand for corporate loans from SMEs in the second quarter of 2015 (Chart 2). For the first time since early 2009, the banking sector reported stable credit demand from SMEs, rather than declining demand. 57% of Dutch banks – weighted according to market share – expect demand for this type of loans to rise in the third quarter of 2015. In addition, the banks reported unchanged credit standards for SME loans.

Among large enterprises, banks with an aggregate market share of 59% reported an increase in credit demand. This development has been ongoing since the first quarter of 2014. Lastly, banks reported that they had made no changes to their credit standards for loans to large enterprises.

Chart 2 - Changes in credit demand from enterprises

Explanatory note: This analysis is based on a weighted calculation of the banks’ survey responses. The outcomes are expressed as net weighted percentages (weighted sum of the number of banks that report an increase less the number of banks that report a decrease). The banks’ responses are weighted according to their share in the market segment concerned. Table 5.5 on the Bank Lending Survey, as published on DNB's website, is based on the new weighting approach (introduced in June 2015). This has resulted in small revisions of historical data.