Template-Type: ReDIF-Article 1.0

Author-Name: Gabor Hajnal
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: hajnalg@mnb.hu

Author-Name: Csaba Lados
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: ladoscs@mnb.hu


Title: Analysis of the Repricing Practice of Newly Disbursed Housing Loans

Abstract: In the Hungarian banking system, newly disbursed, fixed-rate housing loans are
typically repriced with a lag of several months after a change in the interbank rates,
which can be viewed as the cost of funds for institutions. This paper examines the
number of months it takes for a change in the interbank rates to pass through to the
interest rates of newly disbursed housing loans with an initial interest rate period
of over one year. The two-step analysis looks at the repricing practices observed
for Certified Consumer-Friendly Housing Loans (CCFHLs) employing a descriptive
approach, and then a vector autoregressive model is used to estimate the speed
at which interbank rates pass through to aggregate housing loan rates. Based on
the authors' estimate drawing on aggregate interest rate statistics, the changes
in interbank rates are incorporated into the mortgage rates applied by Hungarian
banks in approximately four months; however, according to the interest rate
condition data of institutions' CCFHL announcements, banks' repricing practices
vary, leading to differences in the speed and extent of the interest rate changes
following a shift in the cost of funds.

Classification-JEL: C10, G20, G21
Keywords: new loan contract, housing loan, interest rate repricing, interest rate spread
Pages: 5-43
Volume: 21
Issue: 3
Year: 2022
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-21-3-st1-hajnal-lados.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:21:y:2022:i:3:p:5-43