Business credit conditions have hardly changed amid growing demand


MNB Headquarters in Budapest.

Photo by Andocs / Shutterstock.com

Business credit conditions were little changed in the first quarter, while demand for short and long-term loans increased, reports MTI newspaper, citing a survey of loan officers at the National Bank of Hungary (MNB) .

The survey shows lending terms were “unchanged” during the quarter, with the exception of those for commercial real estate loans which can be traced to industry-specific reasons, MNB said.

Lenders do not anticipate any tightening for corporate borrowers of any size in Q2 and Q3 as they portend a continued recovery in demand.

MNB noted that non-financial lenders were net borrowers of around 190 billion forints in the first quarter, increasing the stock of business loans by 6% from the end of 2020.

Lenders signed around HUF 855 billion in new credit contracts with businesses in the first quarter, up 28% from the same period a year earlier.

Relaxation of retail credit conditions

Credit conditions eased for both mortgage and consumer loans in the first quarter, amid improving economic trends and the housing market, the loan officer survey showed. Fewer lenders plan to loosen up more for retail borrowers in Q2 and Q3, but they expect demand for home and consumer loans to strengthen, in part thanks to pre-funding for state-subsidized home renovations .

Households borrowed HUF 213 billion net in the first quarter. Prenatal baby loans accounted for 60% of this amount.

In July 2019, the government put in place unsecured, interest-free, general-purpose loans for antenatal care for babies up to 10 million forints for families with children. only until the end of 2022.

The annualized growth rate of the personal credit stock reached 13.7% at the end of the first quarter, continuing to climb at the fastest pace in the European Union. However, taking into account the impact of a moratorium on repayments in place since spring 2020, growth was around 5%, MNB noted.

The repayment moratorium will expire at the end of August, followed by a transition period that the government and lenders are still working through.

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