Economy 4 July 2023, 11:49am

Hungary housing loans plummet in May

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The collapse of housing loans has continued in Hungary, with the latest figures by the central bank (MNB) showing that households took out 68% less loans in May 2023 than in the same month of last year. There was a 14% contraction at personal loans, while both retail and corporate HUF deposits grew considerably in annual terms. As regards corporate loans, the volume of those under EUR 1 million in value has declined, while the volume of those over EUR 1 mn has increased somewhat over May 2022.

In May 2023, the average Annual Percentage Rate of Charge (APRC) on new housing loans extended to households fell and their new business volumes rose. Households concluded nearly all new housing loan contracts with initial rate fixation of over one year. The average term of rate fixation was 138 months, the MNB reported.

Both the APRC on personal loans and the new business volumes rose compared to April 2023. However, compared to May 2022 there was a 14% decrease in the new business volume of personal loans.

According to seasonally adjusted data in another report by the MNB, households and non-financial corporations were net borrowers due to transactions in May 2023. Both sectors’ deposit holdings decreased in the month.

New business volumes for prenatal baby support loans to amounted to HUF 18.4 billion in May, up 1.9% m/m. Households took out HUF 2,170 bn such loans between the launch of the scheme and the end of May.

The stock of household loans rose by HUF 19.1 billion in seasonally adjusted terms and by HUF 47.8 billion in seasonally unadjusted terms, due to transactions. According to seasonally unadjusted data, the stock of forint loans increased by HUF 48.1 billion and that of foreign currency loans fell by HUF 0.3 billion.

Average interest rates on households’ forint deposits fell, and those on euro deposits of up to one year rose. New business volumes of both forint deposits and euro deposits of up to one year increased.

Due to transactions, total deposits of the household sector fell by HUF 91.0 billion in seasonally adjusted terms and by HUF 177.1 billion in seasonally unadjusted terms in May. According to seasonally unadjusted data, there were net outflows of HUF 161.9 billion and HUF 15.3 billion, respectively, from forint and foreign currency deposits.

Corporate deposits also grew

Average interest rates on forint and euro loans to non- financial corporations fell month on month in both threshold categories, but rose compared to May 2022. New business volumes of forint to non-financial corporations rose in the categories of up to and over EUR 1 million. Euro loans of up to EUR 1 million rose and those of over EUR 1 million fell.

Due to transactions, outstanding debt of the non-financial corporate sector rose by HUF 267.0 billion in seasonally adjusted terms and by HUF 243.4 billion in seasonally unadjusted terms. According to seasonally unadjusted data, the stock of forint loans and foreign currency loans increased by HUF 184.4 billion and by HUF 58.9 billion, respectively, due to transactions.

Excluding revaluations and other volume changes, the stock of non-financial corporations’ deposits fell by HUF 72.4 billion in seasonally adjusted terms and by HUF 119.9 billion in seasonally unadjusted terms. According to seasonally unadjusted data, there were net inflows of HUF 4.0 billion into forint deposits and net outflows of HUF 123.9 billion from foreign currency deposits.