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KSH: Home loan approvals on the rise

Sustainability

In the first half of 2014, the number of home loan approvals was more than 23,000, up 33% year-on-year, and the total value of the loans approved during this period was HUF 101 bln, up 53%, although this was partly due to a low base, the Central Statistics Office (KSH) reported today.

Compared with the second half of 2013, the number of home loan approvals was almost unchanged and the value of the loans rose 12%, according to the KSH report.

State-subsidized loans accounted for 23% of the home loans approved in the first half of 2014 in terms of contract numbers and 29% in terms of value. The number increased compared to the same period in the previous year. In 2013, subsidized loans made up 18% of the total in terms of contract number and 20% in terms of value. More generous state interest rate subsidies introduced at the beginning of 2013 raised home loan borrowing mainly in the second half of 2013, their effect was less in H1 2014, KSH noted.

Home loan disbursements increased at an even higher rate in the first half of 2014. Thus, almost 33,000 home loans were disbursed during the period, totalling HUF 107 bln, up 64% and 47%, respectively, from a year earlier.

Loans for resale home purchases rose at the greatest pace in the first half: their numbers almost doubled from the first half of 2013 with the value rising by two-thirds. They represented 57% in numbers and 71% in value terms of all home loan disbursements in the period.

The number of loans provided for new home construction and purchase rose by 20%  in H1 2014 year-on-year. The value of these contracts rose by 8%. Loans provided for home renovation made up 17% of the total in numbers and 9% in value, dropping from 21% and 10%, respectively, one year earlier.

The stock of home loans totaled HUF 3,325 bln, which is 11% of the 2013 GDP in Hungary at the end of June 2014, with foreign currency denominated loans accounting for more than 53%.

Within the category of unsubsidized loans, foreign currency loans account for 72%.

Although retail FX lending was suspended in 2010 and has been negligible since it was reintroduced under strict conditions in 2012, a general drop in lending and the weakening of the forint kept the share of FX loans high.

The total home loan stock fell sharply from a rise in 2010. The drop slowed in 2013 and the stock was slightly up, by less than 1% year-on-year by the middle of 2014, according to the report.

Portfolio deterioration ceased in the first half, with 78% of all loan contracts classified as problem-free, and the percentage of substandard, doubtful or bad loans exceeding 9% at the end of June, with almost no changes from the end of 2013. 

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