2. Credit

Credit to the private sector is one of the main elements that the Eurosystem monitors as part of its analysis of monetary developments, since it provides information on the spending and funding of the private sector.

For this purpose, the ECB collects and publishes a wide range of statistics on bank loans and other credit to households and companies.

The following sections look more closely at loans to households and to companies, and present the respective statistics.

2.1 Bank loans to households

Banks are the main providers of financing to households when they need to borrow funds. This lending is classified according to the purpose for which it is granted, such as for house purchase (to buy homes) or for consumption (to buy goods and services). It usually takes the form of a bank loan.

For example, households typically do not have enough capital to purchase property outright. This means that they rely on a bank or a mortgage bank to lend them the money. Loans for house purchase are usually secured against the property that is being purchased, or other forms of guarantee. The interest rates on bank loans influence household spending and investment decisions.

The ECB collects data on the amounts of bank loans to households and the respective interest rates. These statistics provide a picture of financial conditions for households. A key indicator is the overall cost of borrowing for house purchase, which is based on the volumes of, and interest rates on, all loans for house purchase in a given country. These and other loan data are used to analyse monetary developments and the effects of monetary policy, as well as to monitor financial stability.

2.1.1 Statistics on household loans and indebtedness

Statistics on bank loans to households, as well as statistics on new loans and interest rates, are made available on a monthly basis for all euro area countries and various breakdowns are provided.

In [Date 1] the growth rate of loans to households in the euro area for house purchase was [Value 1]%. The average interest rate on these loans was [Value 2]%. Ten years before, [Date 3], the average interest rate was [Value 3]%.

To capture the financial situation of households, the level of their debt is often expressed in relation to their income, or per capita. The household debt-to-income ratio in the euro area was [Value 4]% in [Date 4], compared with [Value 5]% ten years before in [Date 5].

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Bank loans to households

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Bank loans to households

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