The January survey found that funding conditions for domestic banks had tightened and become more expensive, resulting in deterioration in their lending capacity. In other words, banks are less able to lend to corporations. Parallel to these developments, major euro-area banks are strengthening their balance-sheet positions by restraining lending, which is leading to tighter funding conditions in Hungary as well. The Hungarian banking sector is unprofitable at the moment, and thus regional competition for external funding is becoming more difficult for domestic banks.

Credit conditions for household loans were reported to have tightened. A major part of the banking sector is focusing on the premium segment, i.e. on higher-income clientele with significant down-payment capacity and high-quality collateral. According to the MNB’s experts, banks are currently concentrating on the difficulties with the outstanding portfolio, and thus new lending may become a priority for banks again after conclusion of the early repayment and applications for the exchange rate cap scheme.

The recent deterioration in lending capacity can be mitigated by the measures introduced by the MNB in February, namely the two-year collateralised loan tender, lowering of the eligibility criteria for collateral and the new mortgage bond purchase programme.

The Magyar Nemzeti Bank launched its questionnaire-based survey in the spring of 2003. The survey, conducted on a quarterly basis, gathers information on Hungarian commercial banks’ lending practices. It aims to present banks’ assessments regarding domestic market credit conditions. The latest survey is based on the questionnaires completed by banks in January 2012: it reflects their responses to backward-looking questions relating to 2011 Q4 and their expectations for 2012 H1.