The majority of banks expect a pick-up in demand for household and investment loans in 2024 H1

Budapest, 6 February 2024 — Based on the responses to the Lending Survey, banks left corporate and housing loans conditions broadly unchanged in 2023 Q4, and they do not plan to apply any changes in the next six months. However, within commercial real estate loans, 30 per cent of banks tightened financing conditions for office buildings, which may continue looking ahead.

In the corporate segment, 24 per cent of the banks reported a further growth in demand for foreign currency loans; however, 44 per cent of them expect an increase in demand for forint and investment loans in 2024 H1. In 2023 Q4, the responding institutions perceived a pick-up in demand for both housing and consumer loans, which they expect to strengthen further.

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 2023 Q4 Lending Survey between 1 and 17 January 2024.

The banks participating in the Lending Survey left credit conditions broadly unchanged in 2023 Q4 in all company size categories, and they do not plan to apply any modifications in 2024 H1. A narrow range of banks, a net 6 per cent perceived a fall in demand for corporate loans; however, 24 per cent of them reported an increase in demand for foreign currency loans. Looking ahead to the next six months, 23 per cent of the respondents expect demand for corporate loans to pick up again. Due to the expected improvement in the yield environment and stronger investment objectives, 44 per cent of the banks expect an increase in demand for forint and long-term loans and a smaller number, 18 per cent and 19 per cent, respectively, anticipate growing demand for foreign currency loans and short-term loans.

A net 19 per cent of the respondent banks tightened commercial real estate loan standards in Q4, and, representing an even higher proportion, around 30 per cent, tightened financing conditions on office buildings. Looking ahead to 2024 Q1-Q2, 29 per cent of the banks in all commercial real estate segments consider further tightening, citing the challenges facing the industry and banks’ changing risk tolerance. A net 12 per cent of the banks perceived a pick-up in demand for commercial real estate loans, which affected the financing of housing projects and logistics centres, while 8 per cent and 12 per cent of the banks, respectively, reported a decline in credit demand for shopping centres and office buildings. Looking ahead to the next six months, 18 per cent of the respondents expect an increase in demand for housing projects.

Based on the responses to the Lending Survey, banks left housing loan conditions broadly unchanged in 2023 Q4, only pricing conditions were reduced slightly. In the next six months, banks do not plan to change the conditions of access to credit significantly. At 79 per cent, the vast majority of the institutions surveyed reported stronger demand for housing loans in 2023 Q4, with a net 36 per cent expecting an additional pick-up in this area.

In 2023 Q4, 15 per cent of banks eased the standards on consumer loans. By contrast, 39 per cent of them reported increases in spreads. Overall, banks do not intend to modify the conditions of access to credit looking ahead. A net 40 per cent of the institutions surveyed perceived an increase in demand for consumer loans in response to the rise in the consumer confidence index during the quarter, and 62 per cent of the institutions expect further increase in demand in 2024 H1.

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