Drop in banksʼ retail loans slows, new contracts up, says MNB



The contraction of the household loan portfolio of Hungary-based credit institutions slowed to 2.5% year-on-year by the end of September, while the volume of new contracts jumped 43%, according to the National Bank of Hungaryʼs "Trends in Lending" report released today, Hungarian news agency MTI reports.

Transactions increased outstanding forint loans by HUF 35 bln, while increasing the foreign currency loan stock by HUF 2 bln in the third quarter. Net increases in outstanding housing loans and other loans amounted to HUF 10 bln and HUF 6 bln, respectively. Within the category of other loans, the stock of loans to sole proprietors rose HUF 51 bln due to loans granted within the MNBʼs Funding for Growth Scheme (FGS) and those related to state land sales.  

Write-offs and reclassifications cut the total stock by HUF 21 bln in Q3.

The volume of domestic banksʼ new household loan contracts amounted to HUF 249 bln in Q3, excluding the FGS loans granted to sole proprietors.

The volume of new contracts increased by 43% compared to the corresponding period of last year, including a 48% rise in the case of housing loans, a 31% rise in free-purpose home mortgages, and a 57% increase in other consumer loans.

Based on answers to the MNBʼs Lending Survey, in net terms, 6% of the banks polled eased housing loan conditions in June-September. In terms of detailed conditions, a net 28% of respondents reduced spreads, 14% reduced loan disbursement charges, and 15% loosened the maximum loan-to-value ratio.

Looking forward to the next six months, banks foresee a more significant easing only for spreads. For consumer loans, in net terms 16% of banks eased their lending conditions. Most reduced spreads, citing the improving economic outlook, their market share targets and competition as the reasons.

At the end of Q3, the average APR for new forint housing loans was unchanged at 5.7%. The spread over the three-month BUBOR rose, however, by 0.1 percentage point to 4.8%. The average interest rate of mortgage-backed consumer loans decreased 0.5 percentage points to 7.1%, while that of other loans dropped 0.2 percentage points to 16.6%.

In Q3, roughly 60% of the banks taking part in the Lending Survey traced signs of growing demand both for housing loans and for consumer loans. Some HUF 20 bln or about 15% of newly disbursed housing loans related to CSOK, the governmentʼs expanded family home purchase subsidy scheme. Banks said, however, that the expanded scheme has relatively little effect on new home construction, as two-thirds of CSOK contracts signed in Q3 were for the purchase of resale homes.

About two-thirds of the respondent banks anticipated the rise in demand for housing loans to continue, while only around a quarter expected a further expansion of consumer loans.

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