Eurozone firms' demand for credit "surged" as the coronavirus pandemic hit, the European Central Bank said Tuesday, while the outbreak is expected to dampen mortgage demand to historic lows.
"Demand for loans or drawing of credit lines surged in the first quarter... on account of firms' emergency liquidity needs in the context of the coronavirus pandemic and the lockdown of large parts of the economy," the ECB said based on a quarterly survey of 144 banks.
Meanwhile growth in demand for house purchase loans slowed sharply in January-March compared with the previous quarter.
The poll found banks expect mortgage demand to shrink to levels "similar to the realised level in the second half of 2008", after the collapse of the Lehman Brothers bank.
The regular survey found government and central bank interventions helped hold banks back from locking down businesses' access to credit as in previous crises. Compared with the financial and sovereign debt crises of the late 2000s and early 2010s, banks imposed only a "small" tightening of their standards for which companies should receive loans, the ECB said.
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