Mortgage lending by European banks saw a significant rebound in July, driven by declining interest rates that facilitate home purchases, WAM reported citing Bloomberg.
In July, banks in the euro area issued EUR71 billion (approximately $78.5 billion) in loans for residential purchases, marking the highest level since August 2022, based on the latest figures from the European Central Bank.
Read more: GDP grows by 0.2 percent in Euro area and EU in Q2 2024, reports Eurostat
Positive outlook for banks
This resurgence is promising for Europe’s banks, many of which rely heavily on mortgage lending for their profits. Institutions such as Deutsche Bank AG and ING Groep NV have observed an uptick in market activity as central banks begin to ease monetary policy. The momentum could strengthen further, especially with the ECB poised to implement a second rate cut this year.
During the second-quarter earnings call in July, Deutsche Bank AG Chief Financial Officer James von Moltke remarked that he believed a floor had been established in the German mortgage sector, suggesting that growth could now occur from that point.
Similar sentiments were shared by ING Groep NV, with CFO Tanate Phutrakul noting that the bank has successfully expanded its mortgage portfolio across all retail markets, attributing this growth to a “market recovery.”
The increase in home purchases has contributed to a rebound in real estate values. For the first time in nearly two years, German home prices experienced an uptick in the second quarter.
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