Due to falling interest rates

Europe’s companies are borrowing more money from banks

Private households in the EU also requested more loans in January than a year earlier.(Bild: APA/HANS KLAUS TECHT)

Falling interest rates are boosting the desire to invest: Companies in the eurozone are asking for more and more loans. The demand for loans has not risen as sharply since July 2023 as it did in January. And private households also want more money from the banks. 

Banks in the EU issued two percent more loans in January than in January last year, according to the European Central Bank (ECB). Demand for loans has not grown this strongly since July 2023. In December 2024, for example, the increase compared to December of the previous year was only 1.7 percent.

House builders are also joining the trend: Private households in the EU requested 1.3 percent more loans from their banks in January than in January 2024. 

Loans more attractive due to falling interest rates
Loans have become more attractive again in recent months because key interest rates have fallen. Due to the coronavirus pandemic and the war in Ukraine, the ECB has raised key interest rates significantly in recent years. The deposit rate at which banks can park money with the ECB rose to four percent. However, things have been going downhill again since June 2024: since then, the ECB has already cut interest rates five times. The deposit rate currently stands at 2.75 percent.

Borrowers can be happy about this: when interest rates fall, banks can borrow money from the ECB more cheaply. The banks often pass these savings on to their customers. This makes loans cheaper.