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Outlays of ‘consumer-friendly’ home loans reach HUF 100 bln

The stock of Hungarian lendersʼ outlays of certified "consumer-friendly" home loans is expected to climb over HUF 100 billion by the end of May, the National Bank of Hungary (MNB) said on Tuesday.   

The central bank rolled out the consumer-friendly home loan certification last September to counter high interest margins and a low rate of borrower refinancing.

To get products certified as consumer-friendly, banks must cap their home loan lending margins at 350 basis points, origination fees at 0.75% or HUF 150,000, and early repayment fees at 1% or, in the case of repayment from home savings bank accounts, 0%. Lenders must also make potential borrowers an irrevocable loan offer when they inquire at a branch.

Lendersʼ outlays of the loans came close to HUF 18 bln in March and HUF 21 bln in April, lifting the total stock to nearly HUF 87 bln.

The MNB noted that APRs on the loans for interest rates fixed for periods of five and ten years had fallen continuously, reaching 3.95% and 4.95%, respectively, in April.

About 55% of the consumer-friendly contracts signed so far have been for loans with rates fixed for a period of five years. One-quarter were for loans with rates fixed for ten years, 13% for loans with rates fixed for three years, and 7% for loans with rates fixed until the loan matures.

The average consumer-friendly home loan was for HUF 10.8 million, with a run of 16.6 years. This typically covered just over 55% of the cost of the mortgaged property. 

Borrowers aged in their 30s accounted for 44% of the contracts signed, borrowers in their 40s for 28%, and borrowers in their 20s for 18%.

About 88% of the loans were used to purchase resale homes.