The average interest rate for forint-denominated home loans was 12.53pc in February, up 94bp in a month and 281bp higher than a year earlier, National Bank of Hungary (NBH) figures published on Tuesday show.
The average rate for Swiss franc-denominated home loans stood at 6.67pc in February, up 55bp in a month and 112bp higher than a year earlier, while the annual percentage rate (APR) for the loans, which reflects the total cost of borrowing, was 7.70pc, up 22bp in a month and 95bp in a year.
The APR for forint home loans was 15.72pc in February, up 118bp in a month and 254bp in twelve months.
The stock of forint-denominated home loans decreased HUF 7.5bn from January and was down HUF 124bn from twelve months earlier. The stock of foreign currency-denominated home loans rose HUF 18.8bn in a month and HUF 1,033bn in a year. Forex loan stock came to HUF 2,696bn at the end of the month and accounted for 63.8pc of total home loan stock.
The average rate for forint-denominated consumer loans was 23.19pc in February, falling 28bp in a month, but rising 507bp in a year. APR for the loans was 30.95pc, down 18bp from January but up 557bp in twelve months.
The average overnight forint deposit rate was 2.94pc in February, down 9bp in a month but up 28bp in a year. The average rate for fixed forint deposits was 9.58pc, down 39bp in a month, but up 288bp in a year.
These consumer loan rates are like credit card rates, it unbelievable.
And as for mortgage rates, who came blame people for taking Euro rate mortages. The HUF mortgages are more than twice the % rate. Even with the devaluing Forint people still probably fair better off with Euro mortgages.
The spread between loans rates and borrowing rates smacks of a rip off by the banks.
Actually, JD, the people with foreign loans are worse off, because they pay:
1. The interest rate (whatever that is)
2. The exchange rate difference of when they signed and what they pay now.
3. The foreign currency exchange fee (depends on if they are charged or not for it, or if the bank takes care of it, etc).
So, not really. Unless the current forint loan rate jumps, say, another 300 basis points. Then it could be interesting…and crushing, if it isn’t already.
Interesting. I didn’t realise there was an exchange fee.
Having said that, if the Forint has weakened 30% since they took out the mortgage so their interest and loan payments have increased 30%.
I guess for those with interest only mortgages they will still be better off, but having to pay off 30% more capital each month may be a tipping point.
Fair point Mencelus.
If one is paid in HUF with a HUF based loan, then the devaluation of the currency doesn’t change things. You still have to pay 15%.
Of course, if the you have a FOREX, then 30% devaluation hurts you.
Those with Forex mortgages have benefited for years from the high interest rate coupled with FDI and Forex loans chasing HUF, have kept the HUF strong.
Now the party is over for those with Forex loans. And the MNB is now seeing that regardless of what it does with their rate is ineffective. Experimentation with lowering the rate has shown that such has less of an effect than expected on the exchange rate (notice the drop for 13.5% to 9.5% and the exchange rate is still around 300). The lever has been the IMF guarantee.
As to the spread of 5.5% between MNB and the banks, perhaps the banks really do expect a rout on the HUF. Either way, the rate doesn’t make HUF based mortgages too attractive, and having seen others stung by Forex mortgages, you’d have to be a brave soul indeed to borrow money in either mode today. But even if you could, the only liquidity has been awarded to OTP and FHB – and OTP was already rumoured to be in a bad way so that money might not go into mortgages anyway but rather shoring up the balance sheet.
So either way, MNB and the govt haven’t got much in the way of levers to get things moving.
“Oh what a fine mess you’ve got us in this time!”
- Laurel or Hardy
By the way, re exchange fee.
A few months ago, either the Swiss or this country actually closed direct conversions between CHF and HUF forcing those repaying Credit Suisse, UBS, et al to convert first to EUR and then to CHF – and causing repayers to encounter not 1 but 2 exchange rates.
The Swiss have had to turn to devaluing their currency just to keep themselves competitive. A lousy thing for the ordinary Swiss citizen – and a direct result of having too many CHF based loans.
As to “how” you close swaps between 2 currencies, that’s something I really cannot figure out. It’s like closing the internet or commanding the sea not to rise nor ebb. I guess it had to be in collusion with the banks that support the currency exchange.