Impact of Bank Rate Changes on Loan Terms and Property Prices for Middle-Income Buyers
Recent Changes in Bank Interest Rates Impact Real Estate Opportunities for Average-Income Individuals
A recent press release by money.hu has unveiled significant changes in bank interest rate discounts linked to income credits during the summer. These adjustments are affecting loan conditions, particularly for lower-income applicants. The analysis also delves into real estate opportunities in Budapest and beyond for individuals with average incomes.
The survey aimed to assess the impact of recent changes in interest rate discounts on loan conditions and evaluate real estate market opportunities for average-income individuals. According to the Hungarian Central Statistical Office (KSH), the average gross salary in May stood at HUF 433,600 (EUR 1,196).
This income level plays a crucial role in determining the interest rate subsidies and the loan amounts borrowers can access. Recent modifications by banks have significantly altered the conditions for interest rate discounts. For instance, Erste Bank raised the required monthly credit from HUF 200,000 (EUR 542) to HUF 400,000 (EUR 1,083) as of June 15. Similarly, K&H Bank increased its threshold from HUF 250,000 (EUR 678) to HUF 500,000 (EUR 1,356) starting July 29. On the other hand, OTP Bank reduced the required credit level for discounts from HUF 900,000 (EUR 1,223) to HUF 700,000 (EUR 1,416) while raising the applicable interest rate.
For individuals with an average gross salary of HUF 433,600 (EUR 1,196), the income-based repayment ratio allows up to 50% of net income for loan repayments. This translates to a maximum monthly repayment of HUF 216,800 (EUR 598), supporting a HUF 30 million (EUR 81,000) loan over 20 years with minimal equity. Such a loan could finance a property worth HUF 37.5 million (EUR 101,500), with HUF 7.5 million (EUR 20,300) as equity. Combining a partner’s income can enable access to larger loans or better terms.
For those eyeing a home around the HUF 37.5 million (EUR 101,500) mark, there is ample supply in the market. Budapest and county seats offer 11,000 properties in this price range, with attractive options in cities like Miskolc, Pécs, and Nyíregyháza. Notably, cities such as Salgótarján and Békéscsaba, along with rural areas, feature properties at more affordable rates compared to Budapest, providing larger properties for the same price.
The analysis sheds light on the evolving landscape of loan conditions due to changes in bank interest rate discounts, offering insight into the accessibility of the real estate market for average-income buyers. With a significant number of properties available in Budapest and county seats, coupled with diverse loan options, prospective buyers can explore opportunities tailored to their financial situation.
Via money.hu; Featured Image: Pixabay
