"For the fourth quarter of 2007, banks also reported a further net tightening of credit standards for loans to households for house purchase (from 12% in the third quarter of 2007 to 21% in the fourth quarter of 2007).""In addition, credit standards for consumer credit and other lending to households were tightened (from -3% in the third quarter of 2007 to 10% in the fourth quarter of 2007), compared with a net easing of credit standards in the previous quarter."
"With regard to the demand for loans, banks reported that net demand for loans to enterprises remained slightly positive in the fourth quarter of 2007, albeit declining further compared with the previous quarter. "
"Net demand for loans to households for house purchase dropped considerably in the fourth quarter of 2007 and was significantly negative, and net demand for consumer credit and other lending to households also fell considerably over the same period, to negative levels, after a slightly positive demand in the third quarter of 2007."
Most households refrain or are postponing big purchases in the wake of an economic slowdown if not a recession.
In this view, households are starting saving and preparing themselves for harder times . Let's just hope that it's just a blip like in 1997 or 2001, a readjustment that is temporary not like the one in the late 80's ...
Also worth to note that banks are not willing to take risks when with doubt house prices have peaked. They need as well to rebuild their fragile balance sheet in the aftermath of the credit crisis.
Source: ECB
2 comments:
Finland's housing bubble seems not to have burst yet, but the banks have (because of credit crunch from the States) started to tighten on new loans.
While I see this is helpful to the Finnish banks do you think that it is a case of 'too little, too late', or has this move been early enough to stave off a round of bank collapses here?
I hope for the first, but fear for the second, but I don't have enough information to more than guess what the outcome here in Finland will be.
"IslandCrow"
To be franck with you, loan to private household have been falling since end of 2005. This has nothing to do with the credit crunch.
In Finland, banks will do whatever to give loan as they have interest to keep afloat the housing market.
Because if the housing market collapse they will lose big and all the foundation will be shaken.
If the loan are dropping there are many reason. Irrational pricing, uncompetence in government policies.
have a look in the following document in page 13 "loan moderating" chart:
http://www.nordea.com/sitemod/upload/root/www.nordea.com%20-%20uk/Productsservices/eMarkets/eo_uk0108.pdf
Obviously Nordea is in a weak position if the housing market turn south in the Nordic country so i wouldn't agree with their analysis that says the housing market will stay stable in the next few years...i think they are highly optimistic
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