FRANKFURT, May 2 Reuters Euro zone banks tightened access to credit even as demand for it from households and companies collapsed, European Central Bank data showed on Tuesday, in a fresh sign that higher borrowing costs are taking a toll on the economy.

The ECB39;s Bank Lending Survey BLS for the first quarter and lending data for March are likely to boost the case for a smaller increase in ECB interest rates on Thursday, building on weak output data last week.

The survey showed a net 38 of banks in the 20 countries that share the euro reported a decline in demand for credit from companies in the first three months of this year, the biggest proportion since the global financial crisis of 200809.

The general level of interest rates was reported to be the main driver of reduced loan demand, in an environment of monetary policy tightening, the ECB said.

And banks were making it harder for the companies that did apply to get a loan or credit line, with a net 27 of lenders reporting tighter credit standards.

This matched the previous quarter at levels not previously seen since the euro zone debt crisis in 2011.

This was mirrored by March lending data, which showed growth in corporate credit slow to 5.2 year on year.

Demand for home mortgages collapsed further, with a net 72 of banks surveyed reporting a decline, as households turned pessimistic about the prospects for the property market.

There was a smaller decrease in demand for consumer credit and other lending…