German banks tighten business lending standards again as loan demand falls
Banks in Germany tightened credit standards for enterprises in the third quarter of 2026, eased them for housing loans, and saw demand fall in every loan category.
AI illustrationBanks in Germany tightened their credit standards for loans to enterprises again in the third quarter of 2026, while demand for loans fell in every loan category, according to the Bank Lending Survey published by the Deutsche Bundesbank.
The net share of banks tightening standards for business loans was +6 %, down from +10 % in the previous quarter. The tightening was somewhat weaker than three months earlier but slightly stronger than banks had expected in the July 2026 survey. Banks pointed to a perceived rise in credit risk, linked mainly to sector-specific and firm-specific factors and to the subdued economic situation and outlook. The non-performing loans ratio and other credit quality indicators also had a tightening effect, particularly on business lending.
Two factors worked the other way. Banks again reported growing competition in the banking sector, and for the first time in more than two years they reported a higher risk tolerance.
For households, the picture was mixed. Banks eased standards for loans for house purchase, with a net share of −4 % compared with +7 % in the previous quarter. Standards for consumer credit and other lending to households were left unchanged, at 0 % after +11 %, although banks had planned to tighten them.
Credit terms and conditions became more restrictive on balance for business loans and for consumer credit, reflecting higher lending rates and, for enterprises, wider margins on riskier loans. Terms for housing loans remained unchanged on the whole.
On the demand side, the fall in business loan demand was the first in more than two years, and it came after banks had expected an increase. It mainly affected small and medium-sized enterprises and long-term loans. Banks named the higher general level of interest rates as the main reason. Household demand for housing loans declined considerably for the second quarter in a row, more than banks had expected, while demand for consumer credit fell at a significantly weaker pace than in the two preceding quarters. The loan rejection rate continued to rise in all three categories.
For the fourth quarter of 2026, banks plan minor restrictive adjustments to standards for corporate loans and consumer credit, and expect standards for housing loans to remain unchanged. They expect business loan demand to pick up, but household financing needs to decline further.
Banks also reported a slight deterioration overall in their funding situation, with access to customer deposits in particular getting worse. They said digital assets had had no impact on their financial situation, business strategy or credit standards over the past 12 months.
The survey ran from 21 September to 6 October 2026. In Germany, 33 banks took part, a response rate of 100 %.