Demand for loans keeps shrinking

Demand for loans kept declining in the first quarter of the year, for the fifth quarter in a row, reflecting the deficits in investment and consumer confidence and the impact of major delays and postponements in the completion of significant investment moves such as the Elliniko development in southern Athens.

A Bank of Greece survey into loan issues in the year to end-March points to a further weakening in demand, mainly for mortgages but also consumer loans, while the picture presented by corporate loans is of stagnancy.

On the positive side, Q1 saw a decline in the ratio of rejected applications to those submitted, which was due to the drop in demand. There were more corporate and consumer loan rejections.

The course of demand over the years shows that applications increased across all loan categories after 2012, a trend that strengthened significantly after late 2013 and peaked at end-2014. Demand sank in 2015, bottoming out in the fourth quarter after the signing of the third bailout agreement. This improvement proved temporary as demand shrank again in 2016.

Banks now expect demand from households as well as enterprises in the current quarter to stay on a par with the first quarter of the year.