New borrowers, despite declining interest rates, can buy a home more expensive because home prices are rising so fast! Although interest rates have fallen, the cost of the apartment is still high. Let’s see if those who buy a home on credit still do well?
Which is stronger, the rise in interest rates or the rise in house prices?
Why do we have doubts?
Which factor influences our repayment to a greater extent?
- In Hungary, house prices have risen significantly (from 15 used to over 20 million, new ones have risen from 18 to 27 million since 2012), requiring a higher loan amount, resulting in a higher installment.
- Interest rates have fallen sharply since 2012, with mortgage rates falling from 11% to 4%, so in principle the monthly repayment should also be much lower.
Self-financing is also very much included in our monthly repayment, and there are many ways to account for who it is worth. In any case, the savings of the population have also increased, so we would get a distorted result if, for example, we would start with a fixed amount of own funds.
We calculate by two methods
For the average result we selected the data of the HCSO, which also shows the loan amount and the related own funds. A slight distortion to our results is that average home value statistics include non-credit homes.
For individuals who have borrowed individually, we counted 30% of their home value as self-sufficiency, looking at whether the effect of a fall in interest rates or the cost of housing is stronger than the remaining 70%?
On average, there has been a general increase in the willingness to borrow across the country, and even since 2012, borrowing has increased significantly!
House prices continue to rise,
- The repayments on average rose slowly,
- The maturity of loans extended, which, however, tipped the repayment rate slightly but still down.
“Overall, we found that the rise in house prices and the decline in the average equity ratio (higher loan-to-house ratio) resulted in a much larger average installment installment increase for new Hungarian home loans than interest rates would have reduced the monthly burden.” our financial expert.
In terms of amounts, the monthly burden on families for new homes increased from HUF 43,000 to HUF 63,000 and from HUF 47,000 to HUF 73,000 for the first half of 2018. These figures represent the average values of new borrowers.
Those who individually borrowed
The situation of individual home borrowers is different. While the average second-hand apartment requires only HUF 7.0 million in 2012 with a 30% own contribution, today it is necessary to take out a loan of HUF 10.0 million. For new homes, it has risen from 12 million to 16.5 million. The increase in the loan amount was accompanied by a decrease in the repayments, because it was compensated by the decrease in interest rates in the meantime.
The average loan of second-hand flats with a 15-year maturity, with 30% own funds, the average loan repayment installment of second-hand flats decreased from HUF 79 thousand to HUF 75 thousand, and that of new homes fell from HUF 125 thousand to HUF 122 thousand.
For individual borrowers, interest rate cuts have benefited, especially when the borrower moves to another region where home prices are lower than in the capital and surrounding areas!
If you are interested in home loans, CSOKs, qualified consumer friendly loans, consult our credit brokerage experts for free professional mortgage information!