From October, stricter rules for home loans and risk mitigation will come into effect. One of the most important changes is that the monthly repayment can only be 50 percent or 60 percent of the net income for fixed-term home loans for more than 10 years or for the entire term, and 25 to 40 percent for other home loans.
The monthly repayment of the cheapest mortgage loans with a fixed maturity of 10 million forints over a 20-year term remains below 70 thousand forints.
Known that home loan tightening was coming
Already in the summer it became known that home loan tightening was coming, and at the end of August a decree was published. “The most important change is that from October 1, home loan guarantee for a fixed installment of less than 5 years will not be more than 25 percent of the monthly net payment.
And for net income above $ 400,000, the limit will be 30 percent. For fixed-term mortgages, the new rules set limits of 35 and 40 percent respectively. This is a tightening, because under current regulations this limit is 50 and 60 percent, “said Erika Trencsán, an expert at Good Finance . under the rules, only mortgages with a fixed repayment term of more than 10 years or maturity can go up to 50% or 60% of their net income. “
According to Good Finance , the purpose of the new regulation is clear: it encourages mortgage borrowers to choose schemes that guarantee a fixed installment for the longest possible period , at least 10 years or until the end of the term. According to market data, mortgage loans with a fixed repayment term of at least one year already prevail in new home loan agreements, but according to Erika it is important that in the future mortgage loans with a fixed term of at least 10 years or until maturity prevail.
“It is only these that provide protection against the increase in installments, which can occur at any time if interest rates start to rise,” the expert said. He also added that long-term, 10-year or end-of-life home loans are not much more expensive than riskier counterparts.
Less than 70 thousand HUF per month
According to Good Finance data, at the end of August, the cheapest of the 10 million forint mortgages with a 20-year term and a fixed repayment for the entire period were available with a total APR below 6 percent and a monthly installment of less than 70 thousand HUF.
According to Erika, the new regulation is a new step against risky loans and in the future more and more people will choose consumer-friendly loans complying with the rating system of the Hungarian Central Bank, including hopefully fixed repayment plans for as long as possible .