We have seen this since the start of this year: banks and financial institutions are always lending a little more to businesses and individuals.
But if we want to achieve their annual targets too much, wouldn’t our creditors cause a new financial crisis?
Loans, do you want it?
Statistics show this week after week: bankers are generous with companies and households. In Belgium, we have seen an increase in loans granted of almost 5% for companies and SMEs, while this amounts to 6% for individuals.
This “generosity” of financial institutions can be explained by the considerable drop in mortgage loan requests at the end of 2017. Indeed, with the rise in property prices, the Belgian was less tempted to invest in brick and therefore, attracted less help from banks. Following this drop in loan requests, financial institutions have relaxed their acceptance conditions and lowered their interest rates in order to attract more attention from future customers.
Good news for industrialists?
Thanks to this multiplication of loans, Belgium has seen an increase in its number of new businesses. Indeed, the banks are particularly benevolent towards the most productive companies which actively contribute to the economic growth of the country.
In addition, financial institutions are facing increasing competition with the prosperity of all alternatives to credit: crowdfunding, leasing, factoring, private investment, etc.
Watch out for overheating
As you will have understood, the time is ripe for loan requests. And if these increase considerably, it is good to ask how long the conditions will remain favorable for loan applicants.
Indeed, an increase in interest is to be considered. What is more, should we not fear the over-indebtedness of certain players? If it turns out that debt repayment becomes difficult for most of the businesses and households concerned, we will then redirect ourselves to a situation similar to that of 2007-2010.