Template-Type: ReDIF-Article 1.0
Author-Name: Ákos Aczél
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: aczela@mnb.hu

Author-Name: Ádám Banai
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: banaia@mnb.hu
Author-Person: pba1291

Author-Name: András Borsos
Author-Workplace-Name: PhD student at the Central European University
Author-Email: andras.borsos@gmail.com

Author-Name: Bálint Dancsik
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: dancsikb@mnb.hu

Title: Identifying the determinants of housing loan
margins in the Hungarian banking system

Abstract: In recent years, the average spread on newly extended housing loans above the
3-month interbank interest rate has been consistently higher compared to spreads
in neighbouring countries. This paper investigates the reasons behind it by using
econometric tools and simple statistical examinations. In our two-step approach,
we first identify the determinants of spreads based on Hungarian transaction-level
and bank-level data, and then examine the Hungarian banking system’s sectoral
performance relative to other European countries in the main determinants
identified. Our findings reveal that the higher spreads currently mainly stem from
the high proportion of products with initial rate fixation of over one year, the
relatively large stock of non-performing loans, and credit losses. High operating
costs in international comparison may also have an impact on the setting of spreads.
According to our estimates, demand-side attributes also contribute to the emergence
of high spreads, as does the low level of competition in certain regions.

Classification-JEL: G02, G20, G21
Keywords: new loan contracts, housing loan, interest rate spread, spread
Journal: Financial and Economic Review  
Pages: 5–44
Volume: 15
Issue: 4
Year: 2016
File-URL: http://english.hitelintezetiszemle.hu/letoltes/akos-aczel-adam-banai-andras-borsos-balint-dancsik.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:15:y:2016:i:4:p:5-44