[August 29, 2006]

Retail loan rates rise, new loan contracts drop in July

(Hungarian News Agency Via Thomson Dialog NewsEdge) Budapest, August 29, 2006 (MTI-ECONEWS) - Except for overdrafts, rates for forint retail loans rose in July, after a steady decline since February-March, according to the National Bank of Hungary's monthly rates report published on Tuesday. The bank noted that a 25-basis-point base rate rise, which took effect on June 20, affected retail rates. At the same time, rates for euro-denominated retail loans rose, while rates for most Swiss franc-denominated retail loans fell.

Forint retail deposit rates also fell, but only slightly, and the margin between deposit and consumer credit forint rates fixed for up to a year narrowed from 11.84 percentage points in June to 11.64 percentage points in July.

Banks signed for slightly fewer retail loans in July than they did in June, whether denominated in forints or in Swiss francs or euros. Swiss-franc-denominated loans continued to dominate retail lending, their share accounting for more than two-thirds of new consumer loan contracts and three-quarters of new home loans signed in July.

New forint contracts for home loans came to HUF 13.7bn in July, HUF 3.4bn less than in June. New CHF-denominated home loans were HUF 45.6bn in June, slightly down from June, and new EUR-denominated home loan contracts totalled a mere HUF 0.4bn, down HUF 0.2bn from June.

The average rate on forint home loans rose 37bp from June to 9.61pc in July. The rate for CHF-denominated home loans for loans with interest fixed for less than one year fell 17bp to 3.23pc. APR for the average forint home loan rose 25bp to 12.29pc; for CHF-denominated loans, APR was down 34p at 5.48pc.

Banks signed new forint consumer loan contracts for HUF 20.2bn in July, HUF 1.6bn less than in May. Swiss franc-denominated contracts accounted for another HUF 93.2bn of the new contracts in June, HUF 200m less than in the previous month. New euro-denominated loan contracts for loans with a floating rate or fixed for less than one year fell HUF 0.2bn from June to HUF 0.8bn worth. New contracts for similar-term Swiss-franc denominated consumer loans (including personal loans and free-purpose mortgages, but excluding car loans) fell HUF 4.6bn from June to HUF 37.9bn.

The average rate for a forint consumer loan with a floating rate or interest fixed for at most one year -- this type of loan continued to account for two-thirds of all new contracts -- rose 53bp to 18.66pc in July, and the respective APR rose 94bp to 26.03pc. The average rate for a similar CHF-denominated consumer loan fell a slight 3bp to 5.65pc in July, with a 27bp drop in the APR, to 9.02pc.

Forint retail deposit rates rose on every term, with the largest rise, of 44bp to 5.65pc, recorded for term deposits of less than one year. The rate for deposits fixed between one and two years rose 28bp to 6.89pc and the interest on longer-term deposits fell 28bp to 3.83pc, the bank said, noting that the fall reflected composition changes. New contracts for forint deposits fixed for less than one year, making up 99pc of all new term-deposit contracts, totalled HUF 685.2bn in July, up HUF 100.7bn from June. (The bank publishes no figures on Swiss franc deposit rates or contracts.)

Rates on euro deposits fixed for up to one year rose 9bp to 2.29pc and new contracts for these loans fell HUF 8.3bn from June to HUF 81.7bn in July.

Overnight forint deposit rates rose a sharp 29bp to 2.12pc in July and overnight euro deposit rates rose 2bp to 0.76pc.

(HUF 100 = EUR 0.3630)

Copyright 2006 Hungarian News Agency Corporation. Source: Financial Times Information Limited.

Retail loan rates rise, new loan contracts drop in July

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