Housing Loans Remain Budget-Friendly despite Higher APRs than 2021

Housing loans have become more affordable compared to a year ago, but long-term interest rates remain relatively high, as reported by bank360.hu. The most cost-effective option currently available is the CSOK Plus program, where banks can apply up to a 3 percent interest rate on the loan.

Starting in January, housing loans of HUF 10 million (EUR 26K) with an average salary can be obtained with an APR (Average Percentage Rate) of approximately 7 percent. This marks a significant decrease from the rate of around 10 percent observed a year ago.

In 2021, the lowest APR for loans was 4 percent.

Thanks to declining benchmark interest rates and banks adhering to the government-mandated interest rate ceiling, home loans have progressively become more affordable in recent times.

For HUF 10 million (EUR 26K) housing loans, individuals with an average salary can now access APRs ranging from 6.71 to 7.3 percent.

The Central Statistical Office (KSH) defines the average salary as a net income of HUF 375,300 (EUR 982) (October 2023).

Currently, MagNet Bank offers a HUF 10 million (EUR 26K) housing loan at an APR of 6.71 percent for those with an average income, resulting in a monthly repayment of HUF 74,492 (EUR 194). Over the 20-year term, the total repayment amounts to HUF 17,897,280 (EUR 46.8K). Compared to a loan offer three years ago, this represents a monthly increase of HUF 14,000 (EUR 36.6) and a total repayment increase of HUF 3.4M (EUR 8.8K).

For a loan of the same amount with a 15-year term, the monthly repayment increases to HUF 87,000-90,000 (EUR 227-235), while the total repayment can be reduced by HUF 2.2-2.5 million (EUR 5.7-6.5K). With a 10-year loan, the monthly repayment is HUF 113,500-116,500 (EUR 296-304), resulting in a total repayment over 10 years of HUF 13.7-14 million (EUR 35.8-36.6K)

Fact

The CSOK PLUS program is a state-supported, discounted loan scheme available to couples with children, subject to the conditions set by law. This loan scheme is available from January 1, 2024, replacing the previous CSOK schemes nationwide, while in the assisted municipalities it is available in addition to the Village CSOK.

In the most affordable scheme available, CSOK Plus, only the interest needs to be paid in the first year, around HUF 24,000-25,000 (EUR 62-65) per month. From the second year onward, with a loan amount of HUF 10 million (EUR 26K) and a 20-year term, the monthly payment increases to HUF 57,000-58,000 (EUR 149-151).

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Via bank360.hu; Featured Image: Pixabay