There are stricter rules in the home mortgage market from October that help to further secure safe, fixed repayment plans and minimize risks. If, under the new rules, we borrow an average payment for a term of 20 years and fix the interest for 10 years, we can get a mortgage of up to HUF 16-17 million. If, on the other hand, we want to fix the installment on our 20-year loan for a maximum of five years, we can only qualify for a $ 10 million loan with an average payment.
The stricter conditions for home loans will come into effect in October, and many people will be able to bring home a purchase ahead of time, which may also drive sales.
Although 70 percent of new home loans now provide fixed installments for at least one year or even longer period of minimum 10 years guarantee a fixed monthly installment schemes can get really big boost due in October enacted housing loan rules of the Bank of Moboo.
A message of war to risk
One of the most important changes is that in the case of a home loan that guarantees a fixed installment for less than 5 years, the installment will not be higher than 25 percent of the monthly net payment. The limit will be 30 percent for net income above $ 400,000.
For mortgages with a fixed repayment period of between 5 and 10 years, the limit will be 35 and 40 percent, respectively. This is a tightening because so far the limit has been 50% and 60% respectively. From October, the 50 and 60 percent limits will only apply to fixed mortgage loans for a minimum of 10 years or until the end of the term .
“With the changes, the central bank is clearly targeting loan applicants for long-term, secure home loans ,” said Alexandra Bottle , an expert at Barato Bank . “Most have already opted for fixed-term mortgages for more than a year, but many have been providing fixed-term repayments for less than 10 years. The move is understandable because internationally, central banks are expected to create stricter monetary conditions. in the future, which may also increase interest rates . Mortgage loans with fixed repayments until the end of the term provide protection against any increase in interest rates . ” Alexandra Bottle said.
Higher risk, less credit
According to Barato Bank , the most affordable of the 10-year, 10-million-forint, at least 10-year fixed installment plans were available with a full APR of about 4.5 percent and a monthly installment of 63-64 thousand forints. A monthly average net payment of HUF 220,000 – unless the borrower has any other debts – may be sufficient to raise a fixed-term mortgage loan of at least HUF 16-17 million for a minimum of 10 years , subject to the aforementioned 20-year maturity. In contrast, the same average net payment would be sufficient for a fixed-term mortgage loan of up to five years, taking into account the October income limit of 25 percent, only for a loan amount of HUF 10 million.
Alexandra Bottle also drew attention to the fact that the new regulation will result in the largest competition among banks for schemes guaranteeing fixed repayment for more than 10 years . Therefore, it will be very important to look at the banks’ offers before borrowing, as the best solution can be to save significant expenses.
Impact on the housing market
According to Baszlo Groin , a leading financial expert at real estate.com, not only mortgage lending but also the housing market will be affected by the change coming into effect in October. On the one hand, many people will be able to choose fixed-term loans for at least 10 years because they can buy a more expensive home . On the other hand, with the new rules coming into effect in October, it is expected that there will be people bringing forward their home purchase , which could increase the number of sales this year.
Both Baszlo Groin and Alexandra Bottle emphasized that neither the current nor the rules that will come into effect from October will allow the family budget to be fully stretched, so the maximum loan repayment should not be undertaken . According to experts, it is important for borrowers to have as much financial leeway as possible after paying off their repayments.