Strong growth in loans for the purchase and construction of new homes
Budapest, 10 March 2022 — At the end of 2021, loans outstanding to non-financial corporations and SMEs exceeded the year-on-year figure by 11 per cent and nearly 17 per cent, respectively. The growth in market-based loan contracts observed in the fourth quarter, the proportion of which within new contracts approached pre-pandemic levels, provided substantial support for corporate lending. Retail loans outstanding grew by 15 per cent in 2021, with a major contribution from the pick-up in housing loans driven by subsidised schemes. Thanks to the Green Home Programme launched by the central bank in October, the ratio of loans drawn down for the purchase and construction of new homes increased significantly within new housing loan contracts. The rise in long-term yields observed last year has not yet been fully passed through to the lending costs of new housing loan contracts, as a result of which spreads fell to a historic low. Banks did not change credit conditions on corporate and housing loans during the reporting quarter, while they perceived growing credit demand in both segments, which may become even stronger in the first half of 2022.
Banks’ outstanding lending to non-financial corporations grew significantly in the fourth quarter of 2021, with the annual growth rate accelerating to 10.7 per cent. Also taking into account corporate bonds subscribed and purchased by banks, the annual growth rate amounted to 18.4 per cent in 2021. The loans outstanding of small and medium-sized enterprises continued to rise strongly, showing year-on-year growth of 16,8 per cent. In the fourth quarter, total disbursements of corporate loans and SME loans exceeded the pre-pandemic levels of 2019 by 51 per cent and 32 per cent, respectively, also driven by an increase in the share of market-based loans to 78 per cent. In parallel with the higher interest rate environment and the return of market-based loans to nearly pre-pandemic levels, SME forint lending rates rose during the quarter under review. Based on the responses of the banks participating in the Lending Survey, demand for small and micro-sized corporate loans and short-term loans picked up in the fourth quarter of 2021, despite unchanged corporate credit conditions. In the first half of 2022, banks anticipate an easing in credit conditions for small and micro enterprises, and according to the Bank Sentiment Survey 70 per cent of the respondents plan to increase their loans outstanding to SMEs.
In 2021, the outstanding lending of credit institutions to households expanded by 15 per cent, driven by dynamic growth in housing loans and the steadily high volume of prenatal baby support loan disbursements. Retail loans disbursed during the quarter totalled HUF 647 billion, reaching the level seen before the pandemic, with a major contribution from extremely strong lending for housing purposes. Due to the FGS Green Home Programme launched in October, the ratio of loans taken out for the purchase and construction of new homes rose to 27 per cent of total housing loans. The increase in housing loans was driven by the continued rise in house prices, the expansion in home purchase subsidies, demand brought forward as a result of the interest rate hike as well as by the Green Home Programme. The spread on new housing loan contracts fell to a historic low in the fourth quarter, as long-term yields, which are rising in parallel with the change in the interest environment, have not yet been fully passed through to lending rates. On the other hand, banks noted that repricing may accelerate in the first half of 2022. Based on the responses to the Lending Survey, banks reported a pick-up in demand for housing loans in the fourth quarter of 2021, even under unchanged credit conditions, which one quarter of banks expect to continue in respect of both housing and consumer loans in the first half of 2022. Banks experienced increasing competition in the fourth quarter, and according to the Bank Sentiment Survey, about 40 per cent of the respondent institutions wish to increase their exposure both in the consumer and mortgage loan markets in the first half of 2022.
The objective of the publication ‘Trends in Lending’ is to present a detailed picture of the latest trends in lending and to facilitate the appropriate interpretation of these developments. To this end, the report elaborates on the developments in credit aggregates, demand for loans perceived by banks and credit conditions, based on the Lending Survey, and the balance sheet and interest rate statistics of the banking system. Detailed results and the figures of the Lending Survey are available on the MNB’s website at the following link:
Detailed results and the figures of the Bank Sentiment Survey are available on the MNB’s website at the following link: