Banks more "generous" with business loans - BoA: Individuals face tougher conditions and higher collateral requirements
Banks are becoming more lax in granting loans to businesses. According to the Bank of Albania's lending activity survey for the fourth quarter of 2025, banks have eased the standards, conditions and general terms on new loans disbursed to businesses.
The high demand for loans from enterprises has translated into a larger number of loans approved by banks. The latter have responded positively to the need of small, medium and large businesses for liquidity and investment financing.
But why were the standards, conditions, and terms of lending to individuals tightened?
They were tightened only on loans granted for the purchase of housing, while they remained unchanged for consumer loans.
The tightening of standards was driven by the perceived risk by banks regarding the current and expected situation in the housing market. The uniform restrictions imposed in July 2025 by the Bank of Albania on the loan-to-value ratio and the debt service-to-income ratio on new real estate loans were also reported by banks as factors that acted towards tightening lending standards.
Meanwhile, the tightening of lending conditions and terms was carried out through higher collateral requirements in relation to loans taken out for the purpose of financing the purchase of housing.
Demand for credit has been lower for individuals. The factors that led to the decline in demand for credit, according to banks, were lower needs in financing housing purchases and consumption, current and expected developments in the housing market, and regulatory restrictions that came into effect in July 2025.
However, in the first quarter of this year, citizens are expected to seek more credit.
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