The German credit market is feeling the first signs of an economic downturn.
According to the October survey of the Festabanks Lending Survey, there was a slowdown in demand for credit in the third quarter. This is not surprising: since neither consumption nor investment generated much momentum, demand for loans from private households and companies must inevitably have suffered as well.
According to the Festabank, banks slightly tightened their consumer credit lending guidelines in the third quarter. The conditions remained largely unchanged. The expansionary impulses from the economy in the preceding quarters have almost completely disappeared. Banks expanded their margins in the corporate lending business after tightening in previous quarters.
The market development for real estate loans continues to be favorable for borrowers. As the Festabank reports, there was a noticeable narrowing of the margins for average risks. This is due to the intense competitive pressure on the market for private mortgage lending.
The environment for large-volume refinancing has deteriorated significantly. This is due to the difficult refinancing conditions many banks have on the money and capital markets. The usd crisis has led to downgrades of many institutions and a continued loss of confidence.
Germany’s credit market is thus developing much better than the markets in other usd zone member states.
The Festabank notes an overall heterogeneous development, but notes at the same time that on balance consumer, corporate and real estate financing showed a noticeable tightening accompanied by a decline in demand.
The winners of the current market situation include builders and owners in search of real estate financing. As many investors shift to safe havens in the financial markets, the prices of securities classified as safe, are rising. Bendarier in particular are used in the refinancing of real estate loans. Rising prices are synonymous with falling yields.
For new and follow-up financing, the current market environment is therefore favorable. But installment loans without earmarking are not expensive and still relatively easily available. The MHG index for installment loans with a maturity of 36 months has an average interest rate of 7.12 per cent per annum. But the range is very broad: it ranges from 4.60 to 11.61 percent.