Banks have increased interest rates and tightened lending criteria as the country’s macroeconomic conditions worsen. According to bank officials’ estimates, loan growth may have dipped into negative territory after a decade of rapid expansion, with the total outstanding amount owed to lenders steady at 228 billion euros. A drop in disposable income has spread to a larger number of households. Up until now, private sector employees had seen their spending power weaken but now this is also threatening public sector employees, who have been a steady source of business for banks. In response to the changing conditions, lenders have increased the number of loan applications rejected to about 80 percent in some credit categories, such as consumer finance, while demand for mortgages has slumped by 50 percent. Additionally, a number of banks have increased the spread – a charge added onto the base interest rate that reflects the customer’s risk profile – on home loans to up to 3.5 percent, from around 2.5 percent previously. Banks are approving loans only if customers are in a position to provide some form of collateral, such as securing consumer loans against real estate assets. Stricter criteria are being adopted even for good customers, who have repaid loans in the past. The spread on business loans has reached 5 percent as the base interest rate charged in this category follows an upward trend.