These days, there are unfavorable news for mortgage watchers, as hundreds of thousands of Hungarian families worried about the repayment details have received bad news, and the political situation in Italy is alarming.

This year, we have already received news of what will happen to our credit if the currently very favorable interest rate environment changes.

However, the current situation paradoxically favors the creditor who opted for the principle of unfavorable floating rate loans and the situation of mortgage debtors who opted for long-term fixed interest rates is worsening.

We have examined a bit that the majority of home loans in Hungary are tied to some kind of reference rate.

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  • Short-term loans (up to 1 year) are Good Finance,
  • and long-term loans (at least 3 years) are linked to GDR benchmarks or BIRS.

At the beginning of April, 76% of new home mortgage contracts had a minimum 3-year interest rate. This is due to the excellent marketing of consumer-friendly loans, although it is also true that current figures lead to a 2/3 majority of fast-moving loans within a year, although these fast-moving loans are most at risk. Money market movements have an effect on 3-month loans and it is very important that forint-denominated foreign currency loans are just like that.

  • Good Finance was at its lowest point at the beginning of the year, but rose 6 basis points for 6 months and 14 basis points for 12 months,
  • the 3-year GDR benchmark yield increased by 60 basis points and the 10-year GDR increased 100 basis points from the beginning of the year.

BIRS is also up and surprisingly better than short Good Finance.

The repayment installment for a 10 to 20 year old home loan with a 3% interest rate spread is as follows

  • The repayment of the 3-month interest rate loan increased from $ 55,576 in January to $ 56,062,
  • for 5 year olds from $ 60,980 to $ 64,077.

The repayment rate of a 10 million 20-year home loan with a 3% interest rate varies greatly according to the interest period. The 3, 6, 12 months, the 3 year, the 5 year, and the 10 year old can range from $ 50,000 to $ 72,500 from January to the end of May.

You can see what we have already written, the longer the interest period, the greater the installment increase. The exception is the 5 year fix.

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“So we can say that the increase in real installment installments is more common for short-term home loans, but much smaller than for long-term home loans,” our independent expert concluded.

So don’t panic, as the interest rate environment will remain low, despite market turbulence, and any increase in interest rates will be only a few hundred forints in the foreseeable future.

Long-term loans have now suffered greater losses, but they may pay even less than the previous period if they are now turning over.

Unfortunately, nothing can be guaranteed, as the interest rate environment so far will soon change, and it could be frightening if, for example, a 5 percentage point increase over a 20-year maturity yields, for example, a nearly 50% installment increase.

“Banks have not systematically raised interest rates on new long-term mortgage loans with fixed interest rates (while floating rate loans typically follow Good Finance).

Most banks continue to respond to the increase in the yield environment for long-term loans with a delay of several weeks / months, if any, ”said the bank expert.

Anyone who wants to borrow a fixed rate loan should do it as soon as possible because of the prolonged uncertainty in the Italian political situation, we cannot expect a rapid decline in yields in the credit market.

Proliferation of consumer-friendly loans

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