Budapest, 29 August 2012 – The Magyar Nemzeti Bank has published the results of its 2012 Q2 survey on bank lending practices. The survey conducted in July found that the state interest subsidy programme will reduce the APR (annual percentage rate) on housing loans to 9 per cent from the prevailing APR of around 13 per cent, leading to a boost in home lending. Corporate credit conditions were reported to have tightened further. Banks cited factors related to the low willingness to lend, which contributed to tightening attributable to the unfavourable economic outlook.

According to the results of the July survey, credit conditions on housing and consumer loans were reported to have eased in 2012 Q2, resulting in a modest adjustment of the previous broad-based tightening. Banks expected increasing demand for household loans over the next half year. In the case of housing loans, this shift may be brought by the launch of the state interest rate subsidy scheme, as it will reduce markedly the prevailing 13 per cent APR (annual percentage rate): subsidised loans will have an APR around 9 per cent during the early stage of the scheme. This reduction in APR may stimulate demand; banks will become more active on the market, resulting in a tangible, but not significant boost in lending.

Corporate credit conditions were reported to have tightened further in the second quarter in line with the previously observed trend. One important change was that the outflow of foreign funds slowed down in Q2, thus instead of lending capacity, it was lower willingness to lend, attributable to unfavourable economic outlook, which mainly contributed to the further tightening.

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 July 2012: it reflects their responses to backward-looking questions relating to 2011 Q2 and their expectations for the second half of 2012.

Lending Survey