Budapest, 7 November 2023 — In 2023 Q3, credit institutions left their corporate credit conditions broadly unchanged, and they do not intend to make any changes in the next six months. The banks reported a continued decline in demand for loans in the corporate segment. Within commercial real estate loans, banks tightened financing conditions for office buildings to the greatest extent, and, looking ahead, this may continue. The only area where credit institutions perceived a pick-up in demand during the quarter was lending for financing logistics centres. Conditions of access to housing loans remained unchanged, while banks eased in pricing. During the quarter, the responding institutions perceived a pick-up in demand for both housing and consumer loans, which they expect to strengthen further.
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 2023 Q3 Lending Survey between 1 and 17 October 2023.
Based on the responses to the Lending Survey, banks overall did not make significant changes to corporate credit conditions in 2023 Q3. However, due to the uncertain economic outlook and the challenges facing the segment, a net 12 per cent of the banks indicated an increase in spreads for large and medium-sized enterprises, and 21 per cent of them increased the minimum required creditworthiness level for small and micro-sized enterprises. The responding institutions do not plan to make any significant changes to corporate credit standards over the next six months, but one-fifth of them indicated their intention to reduce their fees in response to increased competition in the market. A net 39 per cent of the banks surveyed reported a decline in demand for corporate loans in 2023 Q3, with an even higher proportion, around two-thirds, reporting a decline in demand for long-term loans. For 2023 Q4 and 2024 Q1, only a net 6 per cent of the banks expect a further decline in demand for corporate loans.
Twenty-one per cent of the banks tightened standards on commercial real estate loans in 2023 Q3, while an even higher share, 43 per cent, tightened financing conditions for office buildings, citing industry-specific problems. Looking ahead, of the commercial real estate market segments, banks do not plan to change their credit conditions only in respect of logistics centres, while 26 per cent, 15 per cent, and 47 per cent of them would tighten standards in the case of housing projects, shopping centres and office buildings, respectively, due to the deteriorating outlook for the commercial real estate market. Twenty-four per cent of the responding institutions experienced a decline in demand for commercial real estate loans in Q3. In the case of logistics centres, a net 43 per cent of the banks reported a pick-up in demand, but this could turn into a decline in the next six months, with banks expecting a fall in all commercial property segments at the end of the year and early next year.
In 2023 Q3, banks left the credit conditions on newly disbursed housing loans unchanged, considering partial conditions, a net 16 per cent of the respondents indicating an easing on spreads. According to the responding institutions, market competition and improved borrowing opportunities played a role in the reducition in spreads. A net 44 per cent of the banks intend to ease standards on housing loans in the next six months, and 86 per cent of them foresee an easing on pricing conditions in the context of the introduction of the voluntary APR cap. Sixty-three per cent of the banks already perceived a pick-up in demand for housing loans in Q3, and looking ahead to the next half year, almost all banks expect a further recovery in demand in the market of housing loans.
In 2023 Q3, 4 per cent of the banks eased the conditions on consumer loans, while a net 13 per cent tightened the conditions on home equity loans by increasing spreads. Over the next six months, a net 5 per cent of the banks envisaged further easing by reducing spreads on consumer loans to increase their market share, while they would tighten further the standards on secured consumer loans. A net 22 per cent of the responding institutions perceived a strengthening in demand for consumer loans in Q3, while a net 44 per cent of them experienced a recovery in demand for small amount consumer loans. Looking ahead, a lower proportion, 10 per cent of the banks, expect demand to pick up further in this market.
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:
https://www.mnb.hu/en/financial-stability/publications/lending-survey