Home loan outlays at multi-year high in June

Sustainability

Hungarian banks signed contracts for HUF 66.8 billion of new home loans in June, 37.4% more than in the same month a year earlier, and 8.9% more than in May, data released Wednesday by the National Bank of Hungary (MNB) show.

Monthly home loan outlays were at a multi-year high in June as the last time outlays reached this level was in October 2003, when they stood at HUF 72.7 bln.

The average annual percentage rate on home loans stood at 4.82% in June, down from 5% in May and 5.65% in June 2016. The annualized rate on home loans was 4.59% in June.

The MNB announced in March 2017 the introduction of a "consumer-friendly home loan" certification to counter high interest margins and the low rate of borrower refinancing. Only banks whose lending products meet strict conditions laid out by the central bank may apply for the certification. Lenders have been able to apply for the certification since June 1.

Most recently, home loan products offered by OTP Mortgage Bank, the mortgage arm of Hungaryʼs biggest commercial lender, were the latest to be certified "consumer-friendly" by the MNB Tuesday.

Products offered by MKB Bank, K&H Bank, Erste, FHB Commercial Bank and 50 members of Hungaryʼs integrated savings cooperatives have also been certified.

To become certified, banks must cap their home loan lending margins at 350 bps, 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.

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