The demand for mortgages rose marginally in the first quarter of the year, new figures from the Central Bank have revealed.
According to the data, demand remained unchanged for consumer credit, enterprises and other lending. Banks were anticipating a mild increase during the second quarter of 2011 for loans to enterprises.
The report said credit standards were largely unchanged during the first quarter of 2011, although more restrictive terms and conditions were reported for loans to enterprises. When it came to loans for house purchases, credit standards were tightened due to the cost of funds, balance sheet constraints and a greater risk perception.
Banks said access to wholesale funding markets deteriorated in the three-month period, and a further deterioration was expected in the second quarter of 2011.
The report is part of a euro-wide survey of bank lending, and included five Irish financial institutions.
The wider euro area survey found banks in the region were tightening credit standards after uncertainty over the economic outlook and their access to market financing increased.
"Euro area banks generally tightened their credit standards in the first quarter of 2011, albeit moderately, on loans to both non-financial corporations and households," the European Central Bank said.
"Looking ahead, euro-area banks expect a further moderate tightening of credit standards" in the second quarter, it said.
Euro-area banks reported a "notable increase" in companies' loan demand, which was "mainly driven" by higher financing needs for investment, the ECB said. Prospects for loan demand remain "broadly positive", it added.
In Germany, Europe's largest economy, banks reported a "perceptible easing" of credit-supply conditions for the first quarter and said they expect "little change" in credit standards in the three months through June, the Bundesbank said.
Institutions observed a "clear increase in demand for funds from the private sector", the Frankfurt-based central bank said.
Companies' access to bank loans has improved "moderately" since September to a net minus 9 per cent, the ECB said in a separate report today. The financing needs of small and medium- sized enterprises "increased slightly", it said.
Additional reporting: Bloomberg
