Retail credit conditions loosened

Retail

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Credit conditions were loosened for both home loans and consumer loans in Q1, against a backdrop of improved economic and home market trends, according to a survey of loan officers by the National Bank of Hungary (MNB).

Fewer lenders plan further loosening for retail borrowers in Q2 and Q3, but they project strengthening demand for both home and consumer loans, driven in part by pre-financing for state-subsidized home renovations.

Households borrowed net HUF 213 billion in Q1. Prenatal baby loans accounted for 60% of that. The government introduced the unsecured, interest-free, general-purpose prenatal baby support loans up to HUF 10 million for families having children in July 2019.

The loans are part of a package of family support measures designed to address the problem of depopulation and are available only until the end of 2022. The annualized growth rate of retail lending stock reached 13.7% at the end of Q1, continuing to climb at the fastest pace in the European Union.

However, adjusting for the impact of a repayment moratorium that has been in place since the spring of 2020, growth was around 5%, the MNB noted. The repayment moratorium is set to expire at the end of August, followed by a transition period that the government and lenders are still hashing out.

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