The Credit Situation in Hungary
The mortgage options in Hungary have been tightened, but are still present for foreign investors. Any foreigner can apply for and receive a loan. Preference is given to easily marketable property, which is already built, or off-plan where the bank giving the mortgage is heavily involved in the financing of the development.
The number of buyers has fallen drastically on the real estate market throughout the country, as is the case all over the world, especially in areas of buy-to-let investment. The Hungarian forint has weakened significantly, 1 EUR = 282.42 HUF, 1 GBP = 300.66 HUF, and 1 USD =216.58 HUF. Hungary still experiences currency fluctuations, unlike Slovakia, where the euro has successfully been introduced on January 1. The base interest rate is currently 9.5%, recently dropped, 2 days ago (National Bank www.mnb.hu). Therefore property in Hungary has suddenly become cheaper for the Western European buyer. Interests remain high, EUR loans cost 10.5% while HUF loans cost 15.1%, including all bank fees. LTV is relatively low, 72%, usually for 30 year terms. Best rates apply on off-plan sales, little lower LTV on resale property. The banks have tightened their conditions both to individual buyers as well as developers, but not as much as was expected at the end of 2008.
Because of the shortage of cash, some developers in Budapest are already starting to advertise off-plan apartments with a 10% downpayment now and 90% upon completion. This is good news for investors, as there is less risk involved. We are expecting more of this throughout the year.
The bank loan is cheaper if there is proof of a steady employment income …
