Budapest, 29 August 2024 — Credit institutions' household loans outstanding increased by 6.0 per cent and corporate loans by 3.9 per cent on an annual basis in 2024 Q2. The value of banks' loan contracts with households increased by 76 per cent in the second quarter compared with a year earlier, when issuance was subdued, with the value of housing loan contracts more than doubling. The volume of new corporate lending in the second quarter, at HUF 1,072 billion, was essentially stagnant compared to the same period of the previous year. According to the Lending Survey, in the retail segment, banks eased pricing conditions for both housing and consumer loans as a result of increased competition, but they expect a further pick-up in loan demand only for unsecured loans. With unchanged corporate credit conditions, banks reported buoyant demand for foreign currency loans and short-term loans, which they expect to pick up further.
Outstanding household loans from the credit institutions sector grew by around HUF 281 billion in 2024 Q2, as a result of disbursements and repayments, accelerating the annual growth rate of household loans to 6.0 per cent from 4.2 per cent at the end of the previous quarter. Domestic credit dynamics are in the first quarter of the EU range, and above the average growth rate perceived in the countries of the Visegrad region (4.2 per cent).
The volume of new retail loan contracts amounted to HUF 731 billion in the second quarter, up by 76 per cent from the low level of the same period a year earlier. The increase was mainly due to a 167 per cent increase in housing loans, but personal loans also grew by 55 per cent. The number of housing loan contracts concluded in the second quarter increased at a more moderate pace (57 per cent) year on year, when compared to the volume. That is, the significant increase in volume was supported by the increased loan amounts: while in June 2023 the average contracted amount of housing loans was HUF 11.3 million, in June 2024, it was HUF 18.4 million, which was also due to the increased maximum loan amount of the HPS Plus programme. In 2024 Q2, the share of state-subsidised loans within newly signed housing loans was 24 per cent, up from 20 per cent a year earlier. In June 2024, banks offered market-based housing loans at an average interest rate of 6.4 per cent (APR: 6.7 per cent), and taking into account low-interest state-subsidised schemes, the average interest rate paid by customers in the overall housing loan market was 5.6 per cent. Banks provided 96 per cent of the market-based housing loans signed in the second quarter with an annual percentage rate below the voluntary APR ceiling of 7.3 per cent.
Based on the responses to the Lending Survey, in 2024 Q2, credit institutions eased pricing conditions for both housing loans and consumer loans as a result of increased competition. The increase in demand seen during the quarter is expected to continue to strengthen in unsecured lending, but banks do not expect further growth in housing loans.
Credit institutions' outstanding loans to non-financial corporations increased by HUF 313 billion in 2024 Q2, with the annual growth rate thus accelerating from 2.5 per cent at the end of the previous quarter to 3.9 per cent by the end of June. According to preliminary data, loans outstanding to the large corporate sector grew by 9 per cent, while loans outstanding to the SME sector stagnated. The growth rate of domestic corporate loans is in the middle of the EU range and above the average growth rate observed in the Visegrad countries (1.7 per cent).
The 1,072 billion forints of new corporate loan volume disbursed in 2024 Q2 was only 0.2 per cent below the high base of the same period last year, which was characterised by a surge in lending programmes. The high volume of loans in the quarter was also supported by individual transactions larger than HUF 5 billion, which increased their share within new issuance to 48 per cent from 38 per cent in the first quarter. In the second quarter, the share of subsidised corporate loans was only 20 per cent of new non-current account contracts, down 29 percentage points year-on-year. In the SME segment, the share of subsidised loans was 37 per cent at the end of the period under review, compared to 64 per cent in 2023 Q2. Average interest rate on newly contracted, largely market-based corporate HUF loans with variable interest rates within a year was 10.2 per cent for small loans and 9.8 per cent for large loans at the end of 2024 Q2.
Banks participating in the Lending Survey left overall corporate credit conditions unchanged in 2024 Q2, with no changes planned in the next six months either. In 2024 Q2, 38 and 19 per cent of banks respectively perceived a pick-up in demand for foreign currency loans and short-term loans due to rising inventory financing needs, while a net 14 and 15 per cent saw a decline in demand for HUF loans and long-term loans as investment targets fell. Looking ahead to 2024 H2, a third of banks expect demand for foreign currency loans and short-term loans to continue to pick up, and around a quarter of them also expect demand for HUF loans to pick up as the overall interest rate environment becomes more favourable.