A BRIEF rally in corporates' requests for loans ended in the quarter to January, as companies tempered their demands against the brutal economic backdrop.
The trend is revealed in fresh Central Bank data that also shows banks' access to wholesale money markets deteriorated at a record rate in the October to January quarter.
Corporates demand for credit has been weakening since early 2007, but a tentative rally begun last summer as the collapse slowed in the quarter to July.
The quarter to October showed the first rise in businesses' credit demand in more than three years, as the index broke through the neutral 3.00 barrier and recorded a positive 3.25.
Yesterday's figures show, however, that in the quarter to January corporates' overall demand for credit was back to the neutral point of 3.00.
The deterioration was sharpest for long-term loans, where demand fell from a 3.25 reading in the October quarter to a 2.75 reading in the quarter to January.
Businesses expect demand for credit to pick up again in the quarter to April 2011 across all loan types -- but they had also expected growth in credit demand in the most recent quarter.
Households' demand for loans, meanwhile, was flat in the quarter to January, with demand for consumer credit holding at a neutral 3.00 and demand for mortgages coming in at 2.75, unchanged from the previous quarter.
The latest data also charts a further deterioration in banks' own funding positions.
Banks returned a 1.80 score when asked how their ability to access one-week money in the interbank markets had changed in the quarter to January.
The score puts the result between the 2.00 "deteriorated somewhat" point and 1.00, which signifies "considerable" deterioration.
In the previous quarter, banks had returned a 2.20 result. Access to longer-term money is also getting tighter, with banks posting a 1.60 result in the quarter to January against a 1.80 result in the quarter to October.