Budapest, 5 August 2022 — According to the responses to the Lending Survey, credit conditions were unchanged in the corporate credit market in 2022 Q2, while looking ahead almost one-third of the banks plan to tighten standards due to the uncertain economic prospects. The respondent institutions expect demand for long-term corporate loans to decline over the next six months, while demand for working capital and other short-term loans is likely to increase. Housing loan conditions tightened in Q2, and tightening is also expected to take place in both housing and consumer loan conditions in H2. According to the vast majority of respondents, demand for housing loans may decline in H2 following the pick-up during the quarter under review.
The Magyar Nemzeti Bank conducts a questionnaire-based survey in each quarter among the senior loan officers of domestic banks to report on current changes in credit demand and credit supply. Banks’ senior loan officers responded to the MNB’s second quarter Lending Survey between 1 and 18 July 2022.
Based on the responses to the Lending Survey, banks’ corporate credit conditions were broadly unchanged in 2022 Q2. Due to the uncertain economic outlook and industry-specific problems, 32 per cent of the banks expect to tighten conditions in the segment in H2 by raising the premium on higher-risk loans. A net 13 per cent of the banks reported a pick-up in demand for corporate loans during the quarter, primarily in the SME segment and for foreign currency and long-term loans. A net 32 per cent of the banks expect a general contraction in demand in the corporate segment over the next six months, 45 per cent of them expect a fall in demand for long-term loans, while one-third expect higher demand for short-term funding.
With the exception of logistics centres, credit conditions on commercial real estate loans were tightened by 20 per cent of the banks due to sector-specific challenges and uncertainties. Some 34 per cent of the respondents expect to tighten conditions in H2. A net 38 per cent of the banks reported falling demand for commercial real estate loans over the past quarter, due to declining willingness to invest in real estate and higher interest environment, while 55 per cent of them also perceived a fall in demand for the financing of housing projects. Over the next six months, 58 per cent of the senior loan officers expect a decline in demand for commercial real estate loans due to the rising interest rate level, the only exception being logistics centre financing, where they expect demand to rise.
Citing unfavourable economic prospects, a net 35 per cent of the banks tightened housing loan standards in 2022 Q2, primarily in terms of the minimum level of creditworthiness. On the other hand, a net 56 per cent of the banks reported a further decline in spreads, reflecting the delayed pass-through of rising funding costs to lending rates. Looking ahead to H2, 44 per cent of the banks plan to tighten housing loan conditions, which they plan to incorporate into spreads as well. In addition to the economic outlook, a negative change in customers’ creditworthiness was mentioned as a factor pointing to tightening. In Q2, a net 20 per cent of the respondent institutions reported rising demand for housing loans, and a considerable part (a net 83 per cent) already expect credit demand to decline in H2.
A net 29 per cent of the banks eased the conditions of consumer loans in the form of reduced spreads in 2022 Q2. On the other hand, a net 37 per cent of the banks tightened non-price terms, such as the payment-to-income ratio or the minimum level of creditworthiness, due to the uncertain economic outlook during the quarter under review. Looking ahead to H2, a net 48 per cent of the banks plan to tighten consumer credit conditions due to customers’ deteriorating creditworthiness.
In the Lending Survey, we use the so-called net change indicator, expressed as a percentage of respondents, to indicate changes. This indicator is calculated as follows: market share-weighted ratio of respondents projecting a change (tightening / increasing / strengthening) minus the market share-weighted ratio of respondents projecting a change in the opposite direction (easing / decreasing / weakening).
The detailed findings of the Lending Survey and the set of charts are available on the MNB’s website at:
Lending survey