By John O'Donnell and Paul Carrel
FRANKFURT (Reuters) - One in four banks across the euro zone saw a rise in home loan demand towards the end of last year and almost as many expect the trend to continue, a survey by the European Central Bank showed on Tuesday.
As consumers bet on rising house prices and banks loosen lending standards, demand for home loans has shot up, the study found, a trend that will fuel concerns in Germany and elsewhere that cheap money could be blowing up a property bubble.
"Housing market prospects and to a lesser extent consumer confidence were again the most important factors driving the increased demand for housing loans," the report on bank lending said.
Demand for mortgages was strong in the Netherlands and Germany, two countries considered a safe haven in a struggling euro zone and where borrowing is easy, but also in heavily indebted Italy. In France, where the economy is in the doldrums, there was little change.
Germany's Bundesbank has been keeping close tabs on rising property prices, which have shot up by almost a quarter over the past four years in the country's most prosperous cities.
This has taken the cost of some upmarket two-bedroom flats in Frankfurt beyond 1 million euros (0.77 million pounds), price tags that have shocked ordinary Germans who are typically used to property prices rising at a very slow pace.
Some critics believe that an expected move by the European Central bank to print fresh money to buy government bonds, coupled with long-standing borrowing costs at record lows, could fuel further rises.
"One factor driving demand is that property is a good alternative to keeping money in a savings account," said Thorsten Lange, a property expert with DZ Bank.
"The interest rates will stay cheap and the property demand will stay. But one has to be cautious in case property prices would brake."
The growth in credit demand comes after the ECB made hundreds of billions of euros of cheap credit available to banks. Loan demand from companies also rose, according to banks surveyed.
"The ECB is undecided about how to regard a pick-up in lending only due to mortgages," said Carsten Brzeski, an economist with ING. "They should be glad but they do know that there are risks."