Banks anticipate a pick-up in demand for housing loans and housing project loans, as credit conditions remain unchanged

Budapest, 6 November 2024 — Based on the responses to the Lending Survey, banks left corporate credit conditions unchanged overall in 2024 Q3, with no changes planned in the next six months either. In the previous quarter, banks experienced a decline in demand for corporate forint loans and short-term loans. By contrast, the demand for long-term loans remained unchanged. Looking ahead, these institutions expect an increase in demand for foreign currency loans. Ten per cent of banks in the commercial real estate segment and 41 per cent in the office buildings segment tightened their credit conditions. In the future, this segment, along with industrial logistics, is expected to face a greater degree of tightening. In the commercial real estate segment, banks anticipate the demand to rise for only housing project loans. In 2024 Q3, banks maintained their lending standards for housing loans, whereas 40 per cent reported easing criteria for consumer loans. Looking ahead, credit conditions in both household segments may remain unchanged. Although the upturn in demand for unsecured lending, seen during the quarter, is not expected to continue, there may be an increase in demand for housing loans over the next six months.

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 2024 Q3 Lending Survey between 1 and 16 October 2024.

In general, banks participating in the Lending Survey did not change their corporate credit conditions in 2024 Q3. Nevertheless, as regards price terms, a net 22 per cent of respondents reported an increase in spreads for large and medium-sized enterprises. Banks do not plan any major adjustments to their lending standards for 2024 Q4 and 2025 Q1; however, a net 21 per cent plan to lower the credit line for small and micro-sized enterprises. In Q3, 20 per cent of banks reported a decrease in demand in the corporate credit market, which primarily affected forint loans and short-term loans. This decline in forint loans may be attributable to the phasing out of subsidised loan programmes, causing available funding in HUF, with favourable interest rates, to disappear. Demand for long-term corporate loans remained low, as seen in Q2. Looking ahead to the next six months, excluding seasonal effects, only 6 per cent of banks expect overall corporate credit demand to pick up. However, one third of the banks anticipate a recovery in demand for foreign currency loans.

Overall, one tenth of banks tightened their criteria for commercial real estate loans in 2024 Q3, with 41 per cent offering tighter credit standards for office buildings. Banks will adopt a more cautious approach towards commercial real estate loans over the next six months. Specifically, 23 per cent of lenders would tighten credit conditions for logistics centres, while 53 per cent intend to impose tighter criteria for office building loans. This shift was influenced by increasing vacancy rates and a declining risk tolerance in both sectors. In 2024 Q3, 55 per cent of banks perceived a rise in demand for housing project loans. A small group of banks reported a declining demand for office building loans, with 59 per cent expecting it to decrease further over the next six months. Sixty-four per cent of the institutions surveyed expect the demand for only housing project loans to increase.

Based on the responses to the Lending Survey, banks made no changes to the overall conditions of housing loans in 2024 Q3; however, 51 per cent and 56 per cent increased spreads on housing loans and the interest rate premium on riskier loans, respectively, following the phasing out of the voluntary APR cap. Responding institutions do not plan to change conditions on housing loans in the next six months, but they expect an easing in price conditions in line with a pick-up in the housing market. In the market of housing loans, 22 per cent of banks experienced a decline in credit demand in 2024 Q3 compared to Q2, but looking ahead to 2024 Q4 and 2025 Q1, a net 16 per cent expect demand to grow.

In 2024 Q3, 40 per cent of banks eased conditions on consumer loans by reducing spreads and raising the maximum payment-to-income ratio, primarily in order to achieve market share goals. Conversely, 13 per cent of banks tightened criteria on consumer loans secured by mortgage, and a similar percentage indicated that they would maintain this approach. Banks plan no changes to the standards on unsecured consumer loans over the next six months. In 2024 Q3, a net 80 per cent of the institutions surveyed, reported an increase in demand for consumer loans. However, looking ahead, banks expect credit demand to remain unchanged.

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

MAGYAR NEMZETI BANK
Communications

Contact information:

Phone: 428-2751
Fax: 429-8000
Email: sajto@mnb.hu