Regulator to Raise LTV Limit to 90% for 1st-time Homebuyers
Photo by Fabio Balbi / Shutterstock.com
The National Bank of Hungary (MNB) announced plans on Wednesday to raise the loan-to-value limit for first-time home buyers from 80% to 90%, according to state news wire MTI.
The central bank and financial market regulator said home price growth in recent years had made it "increasingly difficult" for young, first-time home buyers to raise the down payment necessary to take out a mortgage and warned of possible "extensive negative second-round effects".
MNB said it would apply the differentiated 90% LTV limit, allowing a lower down payment, "in the near future".
Concurrently with the release of its 2023 Macroprudential Report, the NBH also said it would recommend mitigating, with legislation, high costs, and administrative burdens, in international comparison, related to early repayment and borrowing. It acknowledged that home loans with rates fixed for long periods had become the norm in recent years thanks to central bank measures, but said that in the current interest rate environment, borrowers could be stuck with high-interest rates for a long time due to low refinancing activity.
MNB said the liquidity and funding position of the banking system remained "adequate" as lenders met the liquidity coverage ratio requirement "with safe buffers", adding that "no significant changes" were apparent compared to recent years.
Higher client deposit rates "may represent a funding risk in the longer term", MNB said, although noting that pass-through to deposit rates in the high-interest rate environment had been "limited" and "lagging".
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.