Household credit demand fell somewhat in 2023 Q4, and banks expect a further fall in 2024 Q1. Enterprises reported slightly lower demand for commercial real estate (CRE) loans. Overall credit standards were approximately unchanged in 2023 Q4, and banks expect the same for 2024 Q1. Banks reported a slight increase in the use of interest-only periods on loans to households.

Households

Overall, banks reported that demand for residential mortgages fell somewhat in 2023 Q4 compared with Q3 (Chart 1). Banks expect demand to fall slightly further in 2024 Q1. Demand for first-home mortgages fell somewhat in Q4, and banks expect a further fall in 2024 Q1. Demand for fixed-rate loans was also somewhat lower in 2023 Q4.

Credit standards for households were approximately unchanged in 2023 Q4, and banks expect no change in 2024 Q1 (Chart 1). The use of interest-only periods increased slightly in 2023 Q4, and banks expect a further slight increase in 2024 Q1.

Banks as a whole reported somewhat higher funding costs and mortgage rates in 2023 Q4 (Chart 2). For 2024 Q1, banks expect funding costs to remain approximately unchanged, while lending rates continue to increase somewhat. Lending margins were approximately unchanged in 2023 Q4, and banks expect the same for 2024 Q1. Banks also reported slightly stronger competition in 2023 Q4 and expect the same for 2024 Q1.

Corporates

For non-financial corporates, banks as a whole reported unchanged demand in 2023 Q4 (Chart 3). Banks also expect demand to remain approximately unchanged in 2024 Q1. Demand for fixed-rate loans increased somewhat in 2023 Q4 but is expected to remain approximately unchanged in 2024 Q1. Demand for CRE loans fell somewhat in 2023 Q4, and banks also expect slightly lower demand in 2024 Q1.

On the whole, banks reported unchanged credit standards for non-financial corporates in 2023 Q4 and expect credit standards to remain unchanged in 2024 Q1. Credit standards for CRE firms were also approximately unchanged, after banks reported tighter credit standards for CRE firms over the past year.

Overall, banks reported unchanged funding costs and lending rates on corporate loans in 2023 Q4 (Chart 4). Banks expect a slight increase in lending rates in 2024 Q1 but approximately unchanged funding costs. Banks reported slightly higher lending margins in 2023 Q4 but expect approximately unchanged margins in 2024 Q1. Banks also reported slightly stronger competition in 2023 Q4.