The borrowing of the population is unbroken, we could say that the hunger of the Hungarians is unquenchable. At the beginning of last year, banks concluded mortgage loans worth a total of HUF 532.6 billion, an increase of 37%. People are increasingly aware of their borrowing and, at the same time, strive for security. Fixed rate home loans for many years are very popular. The rating system introduced by the central bank, the appearance of Consumer-friendly Home Loans, also contributed to this. Experts suggest that variable-rate home loans are cheaper initially, but if you look at a longer time span of 5, 10, 20 years, interest rates may go up, which can lead to a higher installment. Fixed rate loans for more than 1 year provide protection against possible interest rate increase.
A great demand for a personal loan
It’s because taking out a personal loan is very simple, so the amount of your loan has reached a record. According to May figures, people took out nearly $ 44 billion in personal loans in one month. Compared to the data 5 years ago, an increase of approximately five times is observed . In 2013, people borrowed 89 billion forints as personal loans, almost doubling to 172.2 billion for the first 5 months of 2018. Since 2004, there has been no example of taking out a personal loan of this amount (nearly HUF 44 billion). We can say that this is the biggest personal loan ever.
Hungarians’ hunger for credit is unquenchable: What could be the reason?
The answer is simple. One reason is the steady increase in wages over the last few years, the decline in unemployment and the more predictable family budget. Another reason is the popularity of home loans, as many people are forced to finance other real estate expenses (notary fees, land registry fees, attorneys fees, fees, etc.) due to high home prices. Many people also cover the renovation of the home and the furnishing of the property through a personal loan.
The main arguments for a personal loan are:
- No real estate coverage is required, just proof of income and employment to take out the loan.
- Getting a loan is quick and easy, and you can have the amount requested in your account within a few hours if you apply for a loan with your bank. If you take out a loan with another bank, the process will take 4-5 days.
- The interest rate on personal loans is very favorable. For standard claims, the APR for unsecured personal loans ranges from 10% to 24% on average, with interest rates ranging from 9.5% to 18%. With discounts and higher income, the APR can be reduced by up to 8-12%.
- The initial cost of a personal loan is not high either, you can get away from a few tens of thousands of forints.
- Typically, a personal loan can be borrowed at a fixed rate, so your installment is predictable and easy to fit into your family budget.