Banksʼ household loan portfolios grow nearly 3% in Q2


In Q2 2017, the portfolio of household loans of credit institutions in Hungary increased by 2.81% year-on-year, according to data from the "Trends in Lending" report of the National Bank of Hungary (MNB). Housing loans are fueled by the Home Purchase Subsidy Scheme for Families (CSOK).

Housing loans increased by HUF 26 billion and consumer loans by HUF 18 bln, while the volume of other loans was up HUF 30 bln, predominantly attributable to loans to the self-employed sector.  Between April and June, CSOK-related loan contracts were concluded to the value of HUF 28 bln, accounting for 16% of the new housing loans extended during the quarter.

In Q2 2017, credit institutionsʼ outstanding lending to households rose by a net HUF 72.7 bln on transactions, as forint loans grew by HUF 74.4 bln and FX loans decreased by HUF 1.6 bln. In the period under review, write-offs and reclassifications resulted in a decline of HUF 41.5 bln. The value of the household loan portfolioʼs annual transactions in the four quarters ending in Q2 2017 amounted to HUF 162 bln, which is unprecedented since the outbreak of the financial crisis, the MNB said.

The volume of credit institutionsʼ new household loan contracts amounted to HUF 350 bln in Q2 2017. The volume of new loans was up from the previous year by an annual average of 46%. The annual growth rate in the case of housing loans and home equity loans amounted to 35%, while other consumer loans increased by 63%.

Easing conditions

Based on answers to the Lending Survey, in net terms, 3.8% of banks eased conditions on housing loans in April-June. In net terms, 59% of the respondent banks reduced spreads, 37% allowed longer maturities, while 18% reported a tightening of the payment-to-income ratio. Two-thirds of respondent banks attributed the easing of housing loan conditions to market share objectives, half to developments in the housing market, and 42% to ample liquidity.

For consumer loans, in net terms 8.5% of banks eased their lending conditions, which showed among the partial conditions mainly in lower spreads, but in a few cases a tightening of PTI conditions could also be observed.

In the second half of the year, 13% of banks plan to ease the conditions of their housing loans, while in the case of consumer loans none of the banks anticipate further change. 

The average APR on new forint housing loans declined by 0.2 percentage points to 5.1% in Q2. Interest rates on home equity loans rose by 0.1 percentage points, while rates on other consumer loans dropped by 0.5 percentage points in Q2. Consequently, at the end of June the average interest rate level of home equity loans was 6.8%, and that of other loans was 15%.

In the second quarter, almost all of the banks participating in the Lending Survey perceived an increase in demand in the housing loan segment, and similarly almost all participants anticipate a further increase in the second half of the year as well.

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