Notes: The indicator for the total cost of borrowing for firms and for households for house purchase is calculated by aggregating short-term and long-term rates using a 24-month moving average of new business volumes. Latest observation: August 2022. Since the fourth quarter of 2021, banks have also started to tighten their credit standards for loans to euro area firms.
The current tightening follows an extended period during which credit standards were eased reflecting the monetary policy accommodation that prevailed at the time. Since the end of last year, monetary policy normalisation in the context of high inflation and the dampened economic outlook due to the rise in energy costs have significantly changed the perception and tolerance of risks when granting loans.