I bring it to you, coronavirus: it is quite surprising what we see in Hungarian bank accounts

Magyar Nemzeti Bank released its credit and deposit statistics for October. Regarding retail loans, we can see the continuation of the trend of the previous months.

Of the top three drivers of retail lending

• Housing credit will behave substantially in line with 2019 in the last part of the year and in October, while the housing market is affected by opposite processes,
• the second major driver, personal loans, was roughly halved due to a drop in consumption and, perhaps in part, the introduction of an APR ceiling that expires at the end of December, as has been the case since spring .
• Expecting baby loans fell after a strong start last fall, but can be considered a crisis-proof product, and this may be bolstered by new family allowances to be received on January 1.

In the past two years, domestic retail lending has been at or above the 2008 level, mainly due to the fact that this year’s drop in personal loans within consumer loans was offset by lending. waiting for babies.

Given that money and capital markets were only briefly affected by the corona virus in the spring, and central banks continued to apply their loose monetary policy more intensely than before in response to the shock, there is no significant change in the price of retail loans. The APR of home loans is the same (4.3% on average) as in February, and the APR ceiling has kept personal loans below 6% since April.

Within home loans, loans with an interest period of 5 and 10 years remain the most popular and are dominated by consumer-friendly mortgage loan products rated by the central bank. It can be said that the average interest rate on 5-year mortgage loans has increased slightly since the invasion of the coronavirus (now 4.12%), while that of 10-year loans has decreased (now 3.90%) .

Thanks to the repayment moratorium, we continue to obtain loans instead of repaying them, as shown in the figure of net retail loan transactions:

The predominance of net indebtedness is due to the fact that the retail loan portfolio grew by 15% in one year (without the moratorium it would be around 11%), of which home loans increased by 10% and personal loans ( despite the decrease in new placements). ) By 13%. At the end of October, baby loans amounted to HUF 973 billion, representing more than 12% of total household loans.

Meanwhile, the stock of household bank deposits gained 15.7% in one year, of which demand deposits grew more than 20%. Like the loan portfolio, the repayment moratorium has had a beneficial effect on this, of course it would be difficult to say to what extent.

October was also special on the deposit side in other respects. Disbursement of agricultural subsidy advances of HUF 290 billion began on October 16 in the autumn, which is still partly reflected in household deposits, probably due to October being the second strongest month of the year so far. that goes this year in terms of deposit transactions.

There is nothing to do with the interest rate on bank deposits: there has been some increase during the year, but now they are where they were a year ago: banks pay an average interest of 0.3% on a bank deposit in a year .

Even more interesting is what’s happening in corporate lending this fall: As our chart below shows, this has been the strongest month in the past two years for corporate loan transactions.

Our suspicion is that, in addition to the central bank refinanced FGS Hajra surge, individual corporate loan transactions have also contributed to the rise. If we look behind the numbers, we can see that the stock of long-term forint loans increased the most.

The corporate loan portfolio grew by 13.4% and the deposit portfolio by 24.2% in one year (!). Without the repayment moratorium, both would probably be much less. Although October was strong, the corporate credit market has generally slowed since March: expansion has been only 5.5% in the last 7 months, along with the positive impact of the repayment moratorium.

The stock of household deposits increased by 1.46 billion HUF and that of corporate deposits by 2.14 billion HUF, or a total of 3.6 billion HUF, in one year. As we estimate that the repayment moratorium “saved” around HUF 1.5 trillion for participating households and businesses at the end of October (however this amount obviously did not remain in the bank account), it can be said that

Even without the moratorium, the deposit stock of households and companies would have increased by more than 2 billion HUF last year, meaning the reserve in bank accounts could be very strong.

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