Hungarians took out significantly fewer loans in September than a year earlier. The biggest drop was in applications for home loans, but there was also much less interest in the otherwise very popular baby support loan.
A Hungarian financial website, Bank360.hu reported that half as many market-rate home loans were sold out as a year earlier, according to data from the Hungarian National Bank. The main reason is that the cost of these loans has almost doubled, making people think twice about taking them out. To make matters worse, house prices have also risen, especially in the capital.
In September, only HUF 79.3 billion (EUR 195 million) of new housing loan contracts were signed by households.
Moreover, demand has not only fallen for housing loans, but also for personal loans.
According to data from the Magyar Nemzeti Bank, the September figure is only 83 percent of the August figure, and only 62 percent of the volume of over EUR 128 billion a year ago.
In addition, 56 percent of the housing loans taken out were used for second-hand property, and 17 percent were used to buy a new-build home. On average, the interest rate on the loans taken out was fixed for 136 months. Of the housing loans applied for in September, 33 percent were subsidized loans such as Housing Subsidy for Families Scheme (CSOK), the rest were market loans.
A very popular loan among Hungarians is the subsidized baby support loan, a HUF 10 million (EUR 25,000) general-purpose loan with a fixed interest rate.
If the applicant married couple has a child, principal repayment can be suspended for 3 years. If the second child is born, 30 percent of the outstanding principal is assumed by the government, and if three children are born, the remaining amount is waived altogether (paid by the government to the bank).
However, despite the favorable conditions, only HUF 32.17 billion (EUR 80 million) of the baby loan was sold in September, and this loan has seen the biggest increase in cost. According to Bank360.hu, if the subsidy for the baby loan were lost, the cost of the loan would be 12.43 percent.
Featured photo via Pexels