Spanish Banks Tighten Lending Criteria as Consumer Credit Booms
Despite a surge in consumer lending in Spain, banks are subtly increasing caution, tightening conditions on loans as they brace for potential economic headwinds. This shift comes after a significant rise in consumer credit throughout 2025, reaching levels not seen in a decade.
A Decade-High in Consumer Lending
Spanish banks granted a staggering €46.671 billion in consumer loans in 2025, a 21% increase compared to the previous year and the highest figure in a decade. November 2025 saw the total outstanding balance of consumer loans surpass €200 billion, before falling slightly to just under €192 billion in December. This growth has been fueled, in part, by a loss of purchasing power due to inflation, with consumers turning to credit to maintain their spending habits.
Shifting Risk Assessment
However, this lending boom isn’t happening without adjustments from the banks themselves. According to the Bank of Spain’s latest lending survey, institutions are applying a “double speed” approach – maintaining competitive rates on mortgages and business loans while simultaneously tightening conditions on consumer credit, considered higher risk. The average interest rate on new consumer loans rose from 6.41% to 6.55% in December, a notable increase from the year’s low point.
Banks are proactively “covering their backs,” anticipating potential economic deterioration and a possible increase in loan defaults. While current non-performing loan rates remain under control, lenders are keen to avoid future problems.
December Slowdown and Cautious Outlook
This increased caution translated into a slowdown in loan operations in December, with the total volume reaching €4.063 billion – the lowest since August. Despite this monthly dip, the overall trend for 2025 remains strongly positive for the banking sector, with increased margins on higher-risk loans.
Families are also demonstrating a willingness to repay loans quickly, contributing to a decrease in the outstanding balance despite continued lending. This is coupled with a more cautious approach to new borrowing, as lending criteria become increasingly strict.
Impact of Inflation and Economic Uncertainty
The rise in consumer credit aligns with broader economic trends. Since 2020, Spain’s Consumer Price Index (CPI) has increased by 22.1%, while wages have grown by 16.7% over the same period. This disparity in growth has set pressure on household finances, leading to increased reliance on credit.
Frequently Asked Questions
Q: Why are banks tightening lending criteria now?
A: Banks are anticipating potential economic difficulties and seek to protect themselves against a possible increase in loan defaults.
Q: What does this mean for consumers?
A: Consumers may uncover it harder to qualify for loans or may face higher interest rates.
Q: Is consumer credit still increasing despite the tighter criteria?
A: Yes, consumer credit is still increasing but the rate of growth is slowing down.
Q: What is the current state of non-performing loans?
A: Non-performing loans remain under control, but banks are taking preventative measures.
Did you know? The increase in consumer credit in Spain mirrors a trend seen across Europe, as households grapple with rising inflation and economic uncertainty.
Pro Tip: Before taking out a consumer loan, carefully assess your ability to repay it, considering potential changes in your financial situation.
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