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MNB: Outstanding household loans continue to fall for sixth straight year

MNB

In the third quarter of 2015, outstanding loans supplied to households by credit institutions decreased by HUF 67 bln as a result of transactions. Outstanding household loans have been falling continuously since Q3 2009 mostly due to transactions, according to data from the National Bank of Hungaryʼs (MNB) "Trends in Lending" report.

In Q3 2015, repayments exceeded disbursements by HUF 45 bln for forint loans, and by HUF 22 bln for FX loans. The decline in transactions was partly driven by the settlement of forint loans, although to a lesser extent than observed in the case of the settlement of foreign currency loans.

The portfolio of both housing and other loans decreased in the third quarter. The net value of housing loans fell HUF 30 bln and there was a HUF 55 bln decrease for other loans. Transaction-based annual decline in the portfolio rose to 14.6% from 14% recorded in the previous quarter. With the exclusion of settlement and FX conversions, the annual growth rate would have amounted to a 4.5% decline.

The gross volume of new lending to households amounted to HUF 213 bln in Q3. The value of new contracts in the household sector - excluding the volume of loan refinancing - rose by 17% compared to 2015 Q2 and by around 18% in annual terms. Housing loans grew by 26% on an annual basis, and home equity loans by 14%.

Based on earlier data by the MNB, retail lending stock of Hungarian banks stood at HUF 6.03 trillion at the end of September.

The MNB noted the lack of a "refinancing wave" following the conversion and the settlement of household loans. The bank attributed this to the small number of affected customers, to some customers being satisfied with their post-settlement payment burdens, or their loans being on the verge of maturity, and also to some customers not being aware of refinancing options.

In net terms 21% of banks reported they had eased conditions on consumer loans in the third quarter. Conditions for housing loans remained practically unchanged for consumer loans. It was only in relation to maximum maturity that conditions were eased substantially. Of the respondents, 14% predicted further easing on consumer loans and 5% on the easing of housing loans in the coming period.

In 2015 Q3, the APR on secured housing forint loans continued its four-year decline, and after a decline of 0.3 percentage points, by the end of September, the annual percentage rate of charge applied in new contracts reached 5.8%. The interest rate dropped by 0.4 percentage points both in the case of mortgage-backed consumer loans and in the case of other consumer loans. By the end of September, the average interest rate on mortgage-backed consumer loans and on other loans was 7.1% and 20.5%, respectively.

Nearly all respondent banks perceived a recovery in demand for housing loans and a high percentage of respondents expect a pick-up in demand for consumption loans as well.

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