Applying for and placing loans is huge in our country! Many call 2019 the year of the credit crunch! As we are experiencing an increase in loan placements day by day, we are well on our way to bringing the country’s population into debt again!
The strongest growth in borrowing for personal loans, and a significant increase in placements, could be a cause for concern, even though we are not experiencing mass credit defaults. Interest rates are also low, which is seemingly good, but also fraudulent, as a catastrophe in the background can have an explosive effect.
Interest rate hikes and tightening
Let’s examine the chances of a crash. Could mass insolvency be stopped by interest rate hikes and tightening regulations? Let’s see if we should be afraid of a repeat credit crisis!
The disbursement of personal loans and home loans has once again reached enormous proportions, fearing that the rise in indebted retail loans will soon be a cause for concern.
Indeed, we can see a significant increase in lending to personal loans, but note that a steep increase in itself does not necessarily mean overheating in the retail credit market! So let’s compare the growth of personal loans over time.
It was 2009 when lending reached its peak, but the difference was great, because then foreign currency loans had soaring consequences! During the crisis, many families were unable to pay their increased loans, distrust of banks was right, and the bottom of the borrowing mood was in 2016.
After the low point, there was a sudden rise, which can only be seen as balancing earlier restrained behavior.
Now this may mean that the slope of the rise in placements is only a momentary condition and there is no chance of survival!
Banks are forecasting a slowdown in borrowing growth in 2019.
What do banks fear?
Personal loans are risky, and banks are paying close attention to reducing them. Interest rates on personal loans are still higher than on mortgage loans for home use or home loans.
It is easier to obtain because there is no need for collateral, or the bank may just ask for a guarantor.
- exclusion is the active KHR list,
- and a passive list is also difficult to access credit.
Compare Free-to-Use Personal and Mortgage Loans.
- A personal loan has many advantages over a mortgage.
- we also spend the free use mortgage on whatever we want,
Applying for a personal loan is significantly easier.
- A personal loan is not covered by real estate, but by our income alone, and although you need to be a guarantor in many cases, you simply have to pay it in your account within hours because of the simple application.
- Nowadays, it is a relief that you do not have to go to the bank personally, and you can even apply completely online.
- Personal income is covered by our income – so the bank has several requirements: for example, you cannot be liquidated by your employer, you cannot be on probation, and the bank also examines our spending. According to JTM rules, our income is max. We can have 50% of our monthly repayment, but the bank can set a lower percentage.
On the other hand, applying for a mortgage loan is a little more complicated
- Because banks provide real estate collateral, its valuation is time and money, so in many cases, disbursement is shifted to the weeks following the request.
Usually they require a lower amount of personal loan, with monthly payment of 40-50 thousand HUF. It is risky to ask for small loans or to cover your own in a cumulative way, since this is a significant risk, this is double indebtedness!
Low interest, low risk!
Even today personal interest rates are often one-digit and even lower!
Low interest rates, together with real wage growth, are a lower burden on the family, somewhat offset by a rise in the CPI. In most cases, interest rates on personal loans are fixed-term interest rates, because predictability and security are important to borrowers.
Serious labor shortages also reduce the risk, as the debtor can easily find another source of income instead of lost income.
Personal loan default rates, especially compared to other loans, are almost negligible in today’s credit environment.
The indebtedness of Hungarians is still far below the European average.
From this, we can see that if we want to settle our consumption from personal credit, in the current economic and market environment, we do not need to worry about our credit defaulting, it is rare for a personal credit failure.
“If something goes wrong, consult the bank, and don’t wait for the executive to knock on our door. It is not in the bank’s interest either to recover part of your claim through costly and time-consuming procedures, let alone to defraud the debtor. ”
With due care and attention, we do not have to worry about borrowing!
The aim of the GFI is to achieve interest rate stability and, in the current interest rate environment, to increase the inclination for fixed-rate loans.
If you are interested in personal and home loans, GFICs, consumer-friendly loans, contact our credit brokerage experts for free professional information!
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