Housing loans surge 42% as credit tightens and Moody’s warns of default risks
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The latest ECB Bank Lending Survey shows continued credit tightening in commercial real estate, construction, and energy-intensive sectors in late 2024, with further restrictions expected in early 2025.?
?? Although loan demand remained weak across these sectors, residential real estate saw a 42% surge in housing loans, driven by lower interest rates, with these trends expected to continue into 2025.
However, looser mortgage rules across six European countries, including the UK, Switzerland, and Sweden, have prompted Moody’s to issue a warning about increased loan default risks.
?? Alongside this news, the eurozone is projected to experience modest growth in 2025 according to Deloitte's Global Economic Outlook, with real GDP increasing from 0.8% in 2024 to 1.2% this year, but challenges such as reduced public expenditure, higher unemployment rates, and a sluggish investment environment may temper this expansion.?
Meanwhile, at last week’s World Economic Forum in Davos, BlackRock CEO Larry Fink urged investors to reconsider Europe, arguing that pessimism about the region is overblown and highlighting signs of economic resilience.
IMF Managing Director Kristalina Georgieva and ECB President Christine Lagarde echoed the need for Europe to better mobilise capital, with Lagarde also making a veiled warning to the US president that political interference in central bank policymaking could lead to economic volatility and higher inflation.
?? Ignoring Trump’s demand for a rate cut, the Fed maintained rates on Wednesday (29th), while the ECB announced a quarter-point reduction on Thursday (30th) down to 2.75%, ensuring that tensions over the future of monetary policy independence remain a key concern.
With European shares climbing to a record high, driven by strong results from Dutch chip equipment maker ASML, Davos also saw tech executives emphasising the critical need for both the US and its allies to increase investments in AI infrastructure to remain competitive with China.
?? This pressure follows the emergence of DeepSeek, a low cost Chinese AI, that has shaken the tech industry and caused the chip-making giant Nvidia to lose almost USD 600bn of its market value on Monday as a result of claims that it was built on a much smaller budget than ChatGPT, raising concerns about the scale of AI investments.
In the US, Microsoft has committed USD 80bn and Meta plans investments between USD 60-65bn, while a GBP 4bn project in the UK will create one of Europe’s largest data centres.
The biggest players in the industry will be gathering in London on February 27th at the GRI UK & Europe Reunion 2025 to address these developments and more, with open roundtable discussions covering everything from investor perspectives to geopolitics and from data centres to the debt funding gap.
GRI Club’s 2025 Real Estate Debt Outlook
GRI Club’s latest report offers an exclusive look into the forces shaping real estate finance in the year ahead from the insights shared by the biggest debt market leaders during the GRI Credit Opportunities and Real Estate Debt conference in London.
?? Covering macroeconomic and geopolitical trends from the impact of the US election and ECB regulations to the rise of alternative lenders and shifting investor priorities, discussions also addressed senior debt market competitiveness, fund management changes, mezzanine financing, and much more.?
Explore the key takeaways from these insightful conversations, including why investor confidence is growing and an in-depth look at what to expect in 2025 and beyond.
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