home loan interest and inflation money

Thanks to 9.5 percent inflation in April, they have been able to market to take out a home loan customers from banks – call attention to money.hu experts.

At the beginning of the 2000s, forint housing loan interest rates were 10 percent higher than the inflation rate, according to money.hu’s assessment, which, among other things, contributed to the rise in foreign currency lending in Hungary. In the two months since the turn of the millennium until April last year, January and February 2020, there have been examples of housing loan rates slipping below inflation. At the time, this was caused by severe pricing competition between banks, with money deteriorating again above 4 percent after December 2012. However, so far there has been no example in Hungarian banking history that housing loan interest rates have remained below inflation for a long time.

According to the report of the Magyar Nemzeti Bank (MNB), in March this year it was possible to take out market housing loans to customers at an average interest rate of 5.26 per cent, which was accompanied by 8.5 per cent inflation. As a result, it lasts longer

the trend since the beginning of the year is that the average home borrower has received a market home loan from banks at an interest rate more than 3 percentage points lower than the rate of deterioration in the previous year’s base.

Although, according to money.hu, there was a significant rise in interest rates in the housing loan market in April – at the beginning of May we no longer have an offer below 6 per cent among the housing loan interest rates published by banks. real interest rate on the borrower side.

Money spoil is good for the credible

Inflation is a friend of those who have debt, the saying goes, because if the loan interest rate is lower than the rate of money deterioration, the amount of our debt increased by interest will be less, and its present value will decrease. Of course, this is hard to think of if we can buy less goods from the amount left in our wallet after paying the current installment due to inflation than a year ago.

Developments in competition and demand will not allow lending rates to skyrocket

In addition, inflation is always a thing of the past, while loan interest rates predict the burden on the family. Although the date is moving further and further away from the month, experts agree that the rate of money deterioration, which has not been seen for two decades, will diminish significantly over time. Then the interest on loans taken out recently could be a huge extra burden – sensible arguments can be heard. In this connection, money.hu experts point out that in June 2015, when the central bank last measured an average market interest rate higher than 5.26 per cent in March this year, current inflation was 0.6 per cent, ie the interest rate was 475 basis points higher. as the rate of money deterioration. The MNB last showed an average loan interest rate of over six per cent in August 2014, when the rate of one-year money deterioration was only 0.2 per cent. In the light of the above, it can be stated that lending rates in recent months have been much more severely affected by competition between banks and developments in solvent demand than inflation. This is indicated by the fact that most financial institutions have only partially passed on the effects of the central bank’s interest rate hike cycle to borrowers in recent months, which has been resolved by drastically reducing interest rate spreads (by more than 50 percent). Today, thanks to this, not only inflation, but also a good number of credit offers below the current money market reference rate.

Comparison is important

The experts of money.hu also draw attention to the fact that it is still important for those who think about borrowing to be able to review the market offers, even with the help of consultants to find the most suitable constructions for them. Banks’ loan offers still vary significantly. THE money.hu calculator Today, in the case of a loan of 20 million, with a fixed installment of 20 years and a fixed installment of 10 years, the bank offers vary between HUF 148,000 and HUF 175,000 in terms of the monthly installment, which covers a difference of almost 20% in the total amount to be repaid.

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