Euro Zone Mortgage Demand Plunges as ECB Rate Hikes Bite, Survey Shows

Euro zone mortgage demand fell sharply in the three months to September as interest rates rose and credit became harder to obtain, according to the European Central Bank's quarterly Bank Lending Survey released Tuesday. A net 27% of banks reported a decrease in demand for housing loans in the third quarter, a steeper decline than lenders had expected (-12%) and than the previous quarter (-15%). The ECB attributed the drop primarily to rising interest rates, followed by falling consumer confidence and worsening housing market prospects. Banks left mortgage standards unchanged during the quarter but tightened them for corporate loans and consumer credit. They expect to tighten standards across all lending categories in the final three months of the year. France, grappling with bond market turmoil over its public finances, saw the most pronounced tightening among large euro zone economies. The survey captures the impact of the ECB's policy tightening, which began in June and is expected to continue for months in response to war-driven inflation.