In 2025 Q3, household credit demand increased somewhat while corporate credit demand fell slightly. Banks expect credit demand to remain approximately unchanged in Q4. Banks report that while both household and corporate lending rates were somewhat lower in Q3, lending spreads and credit standards were unchanged. As in the Q2 survey, banks report somewhat stronger competition in both segments, and they also expect competition to strengthen slightly further in Q4.

Households

Overall, banks report somewhat higher residential mortgage demand in 2025 Q3 (Chart 1). Demand for first-home mortgages increased somewhat, while demand for fixed-rate loans was broadly unchanged. Banks expect no change in demand in Q4 (Chart 2).

Credit standards for households were approximately unchanged in Q3, and banks expect no change in Q4 (Chart 1).

Chart 1 Residential mortgage demand, credit standards and lending spreads

Chart 2 Household residential mortgage demand

Overall, banks report that residential mortgage lending rates fell somewhat in 2025 Q3 and they expect rates to decline slightly further in Q4 (Chart 3). Lending spreads were broadly unchanged and are also expected to remain stable in Q4. Residential mortgage funding costs fell somewhat, and banks expect them to fall somewhat further in Q4. As in the Q2 survey, banks report somewhat stronger competition, and they also expect competition to strengthen slightly further in Q4.

Chart 3 Banks’ operating environment, lending spreads and lending rates. Residential mortgage loans

Corporates

Overall, banks report a slight decline in non-financial corporate credit demand in 2025 Q3 (Chart 4). Demand was weaker than expected in Q2, and banks expect no change in Q4. Banks report that credit line utilisation and demand for fixed-rate and commercial real estate (CRE) loans were broadly unchanged in Q3, and that no changes are expected in Q4.

Chart 4 Credit demand, credit standards and lending spreads. Lending to non - financial corporates

Banks report that corporate lending rates fell somewhat in 2025 Q3 (Chart 5). Lending spreads were expected to decrease, but banks report that they were approximately unchanged. For Q4, banks expect that lending rates will fall slightly further and that lending spreads will remain virtually unchanged.

Banks' funding costs were broadly unchanged in 2025 Q3, and banks expect no change in Q4. As in the Q2 survey, banks report somewhat stronger competition in Q3, and they expect this competition to strengthen slightly further in Q4.

Chart 5 Banks’ operating environment, lending rates and lending spreads. Lending to non - financial corporates

In this survey, banks were asked about their assessments of firms in the real estate development and CRE segments over the past six months. These questions were last posed in 2025 Q1.

Two out of nine banks report that for real estate developers, the risk of breaching the terms of loan covenants and of default has increased substantially over the past six months, while three report somewhat higher risk (Chart 6). Three of the banks cite weakened financial positions as a key factor in their assessments. Half of the banks report unchanged risk. By comparison, in 2025 Q1, no banks reported that risk had risen sharply in this segment. Five out of ten banks then reported somewhat higher risk, while half then also reported unchanged risk.

Chart 6 Banks’ assessments of real estate developers

Eight out of nine banks report a broadly unchanged risk of CRE borrowers defaulting on their loans and of them breaching the terms of loan covenants relating to interest coverage ratios (ICRs). Moreover, seven out of nine banks report that CRE sales made by borrowers to prevent breaching loan covenants and default were broadly unchanged (Chart 7). By comparison, in Q1, four out of ten banks reported a somewhat higher risk of such sales. Furthermore, three banks report approximately unchanged use of interest rate hedging among CRE firms over the past six months, while two report a slight increase and two report some decline.

Chart 7 Banks’ assessments of the CRE segment