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Borrowers rush to take advantage of home loan subsidies before elimination

The value of new retail consumer loan contracts signed by Hungarian banks changed little in June compared to May, but the value of new forint home loan contracts jumped as borrowers rushed to take advantage of state subsidies before they were discontinued at the end of the month, fresh data from the National Bank of Hungary (MNB) show.

The value of new forint home loan contracts nearly doubled to HUF 18.1 billion in June from HUF 10.3 billion in May and HUF 9.1 billion twelve months earlier. The value of new HUF consumer loans was HUF 19.0 billion in June, up slightly from HUF 17.2 billion in May, but down from HUF 22.2 billion twelve months earlier.

Average APR -- which reflects the total cost of borrowing -- for HUF home loans was 14.87% in June, down from HUF 15.45% in May, but up from 13.32% twelve months earlier. Average APR for consumer loans fell to 30.08% in June from 32.33% in May, but was up from 24.60% twelve months earlier.

The value of new euro-based home loans (state subsidies apply only to forint home loans) rose to HUF 15.0 billion in June from HUF 12.7 billion in May and a paltry HUF 200 million twelve months earlier. The value of new EUR-based consumer loans inched up to HUF 12.6 billion in June from HUF 12.2 billion in May and HUF 700m twelve months earlier.

The popularity of euro loans grew markedly in the autumn when many banks stopped signing new contracts for Swiss franc-denominated loans, long the most popular loan construction for Hungarian retail borrowers, because of increased forex risk as markets grew more volatile. In September, the value of new EUR-based home loan contracts was just HUF 300 million and the value of new euro consumer loans was a slight HUF 500 million. In the same month the value of new CHF-denominated home loans was HUF 72.0 billion and the value of new CHF-based consumer loans was HUF 72.5 billion.

The value of new forint-based lending contracts has changed little since the crisis.

Average APR for EUR-based home loans was 9.65% in June, slightly under 9.85% in May, but up from 7.47% twelve months earlier. Average APR for EUR-based consumer loans was 12.12% in June, down from 12.35% in May, but up from 11.13% twelve months earlier.

The value of new Swiss franc-based home loans increased to HUF 4.1 billion in June from HUF 3.9 billion in May, but was just a fraction of the HUF 67.0 billion value twelve months earlier. The value of new CHF-based vehicle loans also rose slightly to HUF 1.9 billion in June from HUF 1.7 billion in May, but was down from HUF 8.9 billion twelve months earlier.

Average APR for CHF-based home loans was 7.39% in June, up from 7.19% in May and 6.85% twelve months earlier. Average APR for CHF-based consumer loans slipped to 19.37% in June from 19.51% in May, but was up sharply from 12.11% twelve months earlier.

Hungarian households placed HUF 1,169.7 billion in fixed deposits in June, up from HUF 1,022.5 billion in May and HUF 727.6 billion twelve months earlier. They put HUF 1,323.5 billion into sight deposits, down from 1,328.2 billion in May and HUF 1,528.6 billion twelve months earlier.

The average weighted rate for fixed deposits fell to 9.90% in June from 10.02% in May, but was up from 7.89% twelve months earlier. The average rate for sight deposits was 2.87%.

The MNB base rate was 9.50% in June. (MTI – Econews)