Budapest, 7 May 2024 — Based on the responses to the Lending Survey, banks left credit conditions for corporate and housing loans broadly unchanged in 2024 Q1, and they do not intend to change them substantially over the next six months. Twenty-one per cent of banks changed their credit conditions for commercial real estate loans, and a further tightening for office buildings and logistics centres is expected. Around a quarter of banks reported a decline in demand for forint loans and long-term loans; looking ahead, but in the case of the former, they expect a recovery in demand. Fifty-three per cent of banks experienced an increase in demand for home development project loans in the first quarter, and an even greater proportion of them expect a pick-up in demand in this segment further ahead. The respondent banks experienced a surge in demand for both housing loans and consumer loans in the first quarter, and an even greater number of them expect a further increase.
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. The experts responded to the MNB’s 2024 Q1 Lending Survey between 1 and 17 April 2024.
Banks participating in the Lending Survey left credit conditions for all enterprise sizes broadly unchanged in 2024 Q1. As regards price terms, however, a net 21 per cent of the respondents reduced fees on loans for large enterprises and increased those for small enterprises. Looking ahead for 2024 Q2-Q3, the banks do not intend to significantly change corporate credit standards. In 2024 Q1, one-quarter of the institutions experienced a decline in credit demand in the corporate sector, which mainly affected forint loans and long-term loans. Banks identified customers’ low investment intentions to be the main reason behind the decline. A net 6 per cent, a narrow range of banks experienced a pick-up in demand for short-term loans. Overall, 14 per cent of respondents expect an increase in demand in 2024 Q2-Q3; however, no recovery is expected in terms of long-term loans, with 7 per cent of banks anticipating a decline in demand. Due to the improvement in the general interest rate level and the increased the need for inventory and receivables financing, 45 per cent and 26 per cent, respectively, of banks expect an increase in demand for short-term loans and forint loans.
A net 21 per cent of banks tightened conditions for commercial real estate loans in 2024 Q1. An even greater proportion, some 34 per cent, tightened their terms on lending for office buildings due to the challenges affecting the industry and banks’ changing risk tolerance. Looking ahead to 2024 Q2-Q3, a small proportion of banks, at 13 per cent and 24 per cent, respectively, considered tightening credit conditions for lending for logistics centres, in addition to office buildings, citing changes in risk tolerance. In 2024 Q1, a net 52 per cent and 23 per cent, respectively, of banks experienced an increase in demand for financing housing projects and logistics centres, with a net 11 per cent reporting a decline in demand for office building loans. Looking ahead to the next six months, a significant proportion of 71 per cent of banks expect further strengthening of credit demand for financing housing projects, at the same time, in the case of office buildings, more than half of the banks expect the decline in demand to continue.
Based on the responses to the Lending Survey, banks left credit standards for corporate and housing loans broadly unchanged in 2024 Q1; however, in terms of the requirements for the loan-to-value ratio, 62 per cent of banks eased the LTV limit made available by the MNB for first-home buyers. A mere 8 per cent of respondent banks considered tightening their standards looking ahead to the next six months, which concerns loan origination fees; however, a net 47 per cent of them plans to decrease spreads on loans, which may be related to complying with the APR ceiling. Twenty-two per cent of respondent banks reported an increase in demand for housing loans in 2024 Q1, with around half of the banks projecting a further pick-up in the period ahead.
Eighteen per cent of banks eased standards for consumer loans in 2024 Q1. By contrast, 13 per cent of them tightened conditions for consumer loans secured by mortgage. Looking ahead, 13 per cent of banks considered further easing of consumer loan standards through a reduction in spreads, while a net 69 per cent would tighten the terms of vehicle financing citing a deterioration in customers’ creditworthiness. A net 35 per cent of respondent institutions experienced rising demand for consumer loans in Q1, with 46 per cent expecting a further increase in the period ahead.
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