Bloomberg News

Hungary Central Bank Sees Drop in Consumer Mortgage Rates

August 29, 2012

Hungarian household mortgage rates are set to drop and demand for credit will probably rise as a result of state interest-rate subsidies on housing loans, the central bank said in a quarterly lending survey published today.

An expected decline in annual interest rates on subsidized mortgages to around 9 percent from the current 13 percent may “stimulate demand, resulting in a tangible but not significant boost in lending,” according to the survey.

Hungary’s government has offered interest-rate subsidies on consumer mortgages as it seeks to prop up the real estate market and household lending. The nation’s economy is mired in its second recession in four years as domestic consumption collapsed, corporate lending nosedived and the euro-area crisis sapped demand for exports.

Loans to households that are more than 90 days overdue rose to 16.3 percent by the end of the second quarter from 14.9 percent in the previous three months, the central bank said.

Corporate credit conditions will tighten further in the second part of the year as banks’ willingness to lend declines because of the “unfavorable economic outlook,” according to the report. The economy may face a credit clump as corporate lending declines, the central bank warned in May.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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