Budapest, 2 August 2024 — Based on the responses to the Lending Survey, banks left credit conditions for corporate loans and commercial real estate loans broadly unchanged in 2024 Q2. Banks reported growing demand for corporate foreign currency loans and short-term loans, and they expect a further pick-up in demand. By contrast, demand for long-term loans was reported to have been broadly flat, with no recovery expected looking ahead. In the context of home development project loans, 63 per cent of the responding institutions expect a further pick-up in this segment. In response to increasing competition, banks eased their price terms for housing loans and consumer loans for households. Banks expect the recovery in demand for unsecured loans experienced in the quarter to continue; however, they do not expect a further pick-up in housing finance.
The Magyar Nemzeti Bank conducts a questionnaire-based survey in each quarter among 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 Q2 Lending Survey between 1 and 16 July 2024.
In 2024 Q2, banks participating in the Lending Survey left their credit conditions broadly unchanged in all business size categories. As regards price terms, however, 20 per cent of the respondents reduced spreads and fees on loans for small and micro-sized enterprises, and a similar proportion reduced the premium on riskier loans for large and medium-sized enterprises. Looking ahead to 2024 H2, banks do not intend to change credit conditions for the corporate sector. Overall, banks reported unchanged corporate credit demand in the quarter, but 38 per cent and 19 per cent of the banks, respectively, perceived a pick-up in demand for foreign currency loans and short-term loans due to rising demand for inventory financing, while a net 14 per cent and 15 per cent of the banks, respectively, experienced a decline in demand for forint loans and long-term loans as investment intentions declined. Looking ahead to the next six months, a third of the banks expect demand for foreign currency loans and short-term loans to continue to pick up, and around a quarter also expect demand for forint loans to increase as the general interest rate environment improves.
Overall, the banks surveyed did not change their standards for commercial real estate loans in 2024 Q2, but 37 per cent of them tightened financing conditions for office buildings due to the negative prospects for the sector. In 2024 H2, 15 per cent and 58 per cent of the banks, respectively, envisaged tightening financing conditions for logistics centres and office buildings due to the change in risk tolerance. In 2024 Q2, around two-thirds of the banks saw a pick-up in demand for commercial real estate loans due to more favourable borrowing opportunities. Looking ahead to the next six months, a similar proportion expect loan demand for housing projects to continue to increase, while 38 per cent of the banks expect demand for loans to finance office buildings to decline due to the challenges facing the sector.
Based on the responses to the Lending Survey, a narrow range of banks, around a net 9 per cent, eased their credit standards for housing loans in 2024 Q2, while 45 per cent and 57 per cent, respectively, reduced their spreads on housing loans and the premium on riskier loans as a result of voluntary compliance with the APR ceiling and increased market competition. Looking ahead, a net 9 per cent of the responding institutions considered a further easing, while the easing indicated in price terms could be followed by tightening at around half of the banks. All institutions surveyed reported a recovery in demand for housing loans in the second quarter, with no further recovery expected in the second half of the year.
Overall, 8 per cent of the banks tightened standards for consumer loans, and 28 per cent tightened criteria for secured consumer loans. A net 39 per cent of them reduced their consumer credit spreads during the quarter. Looking ahead, a broader range of banks, around 16 per cent, expect a further tightening of consumer credit conditions, while a net 34 per cent would continue to reduce spreads to increase market share. During the second quarter, a net 58 per cent of the institutions surveyed experienced a pick-up in demand for consumer loans, with 81 per cent expecting a further increase in the next six months.
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: