By the third quarter of 2015, banks had issued 48 per cent more housing loans to households than in the same period of 2014. This represents a HUF 256 billion disbursed loan, an amount not seen since 2009, which is explained by the general boom in the housing market.
Buy a home from a mortgage loan
Although the proportion of those who would buy a home from a mortgage loan has not yet reached pre-crisis levels, it has clearly increased compared to previous years. According to Good Finance, the proportion of people who bought their home on a loan in Budapest was around 20 percent in the first and third quarters of 2015.
According to the MNB, products with a maximum interest rate of one year are available for home mortgages with an average cost of credit of 5.64 percent, but up to 4.6 percent. If the interest rate is between 1 and 5 years, the average APR will be around 6.3-6.4% for those with an interest rate over 5 years.
Today, therefore, in the current financing environment, it is cheaper to finance a home purchase using a forint-based mortgage than during the pre-2008 foreign currency loan period, when the average cost of euro and Swiss franc foreign currency loans was around 5.5-6%.
Experience so far shows that customers prefer the lowest installment, so look for cheap (or cheapest) credit products with 3-4 percent interest. Such constructions are products with an interest period of less than one year.
Of course, there are customers who prioritize security and long-term predictability, and are therefore willing to choose a more expensive fixed-income product for up to 10 years or more. The interest rates on these mortgage products generally range from 5-6%.
It is worth paying attention to the cost of borrowing
As it is worth exploring the possibility of replacing your existing loan in an environment of ever-decreasing interest rates, as you can significantly reduce your current monthly repayment installments with new mortgages.
Test your current loan for free with Good Finance credit brokers and find out how much less your monthly installment will be.
I would like to know how much less my installment will be!
Although customers want to have the shortest possible maturity, this is often overridden by opportunities and other considerations. According to the statistics of the Hungarian Central Statistical Office (CSO), the average maturity of housing loans in the first half of 2015 was 14.2 years. Furthermore, the average amount of these loans during the same period was around HUF 7.5 million.
According to Good Finance, banks’ terms and conditions are very different. There are some banks that do not deal with certain types of mortgages (eg freelance mortgages) and some that do not deal with CSOK (Socpol 2015). Some have no construction loan. Some have only a 6 month interest rate to get a home loan. Competing banks are not able to objectively compare the opportunities they offer and the shortcomings of each other, and admit it is not expected of them. Comparing banks’ offerings from the customer’s point of view is the task of an independent credit broker. Good Finance Credit Intermediaries are all economists with many years of commercial banking experience. If you want to eliminate all the unnecessary risks, enter your details when borrowing so we can help you.