The baby-sitting allowance provides interest-free loans to young married couples, and when three children are born, the entire debt is released by the state.
Pregnancy support conditions
- You can apply for an interest-free loan of HUF 10 million.
- free use, can be used for anything
- There is no interest on a baby loan if a child is born within five years.
According to experts, the impact of a baby loan on banks can be both positive and negative. Will the baby loan affect the profitability of Hungarian banks?
According to the Financial Stability Report
- can affect the profitability of credit institutions through multiple channels,
- on the whole, the interest rate profitability of banks may be adversely affected by a baby loan if the interest income and expenses paid to the credit institutions for carrying out the baby loans are less than the commission, interest and premium income,
- the negative impact is most pronounced in the area of personal and mortgage loans, especially if borrowing is accompanied by childbearing,
- it can reduce banks’ losses if the borrower misses childbirth, in which case the interest rate on the loan may increase by 3 percentage points.
- At the same time, a positive effect on bank profitability can be achieved by a further increase in the loan portfolio and a reduction in the risk costs of a state guarantee, which may also result in credit institutions’ premium income,
- there may also be cases where baby loan applicants are required to use the interest subsidy to invest the amount of the loan taken after the child is born. Even buying government securities, which may result in a slight increase in income for banks.
The expected banking impact of a baby loan is twofold
- Redemption, crowding out of mortgages,
- reimbursement from the state,
- decreasing credit risk,
- Transaction fee for the purchase of government securities
- credit expansion.
- replacement of higher-interest private loans
- crowding out mortgage loans with higher APRs.