Monthly Archive: July 2019

Teach Children to Save

Do not wait for your children to grow up to begin modeling their financial habits. Teach children to save from early childhood. Do not forget that children repeat after their parents everything that they see, and your actions today can have a big impact on your children tomorrow when they grow up.

In one of the interesting studies, scientists found out that children whose parents have a debt of 200,000 rubles and more, most of them spend money as soon as they receive it. The study also showed that children whose parents do not save money for emergencies or old age are less inclined to save money.

Kids start modeling finances earlier than you think.

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Even very young children perceive financial signals from their parents. According to a study of financial consumer protection, children as young as 3 years old are ready to start learning financial skills and pay attention to actions that lead to success. And when a child enters school, he becomes especially aware of the actions of his parents and begins to absorb his successes and mistakes.

When children grow up to school age, they begin to observe their parents when they make important decisions in family life. They are interested in issues such as paying bills or a list of products to the store.

But many parents do not always find the time to bring solutions to such issues to children in an understandable form. Perhaps they think that their children are too young to understand what is happening. In three or four years, a child can repeat after mom that a toy or some beautiful thing is expensive, but that does not mean that he understands the meaning of the word.

Sooner or later there comes a time when the parent realizes that the child knows something about the world and he learned it not from him. At such moments it is necessary to understand that it is better than you, no one will explain to him about the initial financial rules. When your child asks to buy something at the store, it is much easier to do this than to explain to him why you are refusing him. Besides the fact that you can spoil a child in this way, you also teach him to instantly satisfy his needs.

Teach children to save from preschool age

Teach children to save from preschool age

Already more than one study shows that children should be taught to save before they go to school. You should invent games to strengthen financial knowledge, show that patience will lead to reward and teach yourself to regulate your behavior. When you are in the store with your child, think about what he sees, how you throw your purchases into the basket without hesitation and use junk food every time.

Purchase for yourself to save more money

Purchase for yourself to save more money

In some families, when the wife arrives home, “disassembly why and why you bought so much” begins. Watch your actions and explain to the children why you acted anyway. Perhaps this will affect your own behavior. Talk more about the family budget. Explain why you are delaying the purchase for yourself to save more money. Or tell us about the budget that you created for your family and how you will stick to it. It will be useful if you tell your children how you stretched the budget and spent several weeks on 10 000 rubles. In this case, do not forget to talk about specific actions and about the reward that will follow as a result of such savings.

And do not stop talking with your children when they begin to turn into demanding teenagers. According to many studies, adolescents listen more to their peers than to their parents, but the words of family members can still make a lasting impression.

Adolescence is very difficult, both for parents and for adolescents themselves. But controlling and communicating with them will be much easier if you start doing it from an early age.

Foreign Currency Loans – Analyst: Converting Forint to SMEs

The Hungarian Banking Association does not comment on Viktor Orbán’s announcement on the conversion of foreign currency loans for small and medium-sized enterprises (SMEs). According to the Buda-Cash analyst, the intention is logical, but there are several issues in the realization.

Programs will be set up to allow SMEs to convert their foreign currency

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Prime Minister Viktor Orbán announced on Tuesday at the forum of the Hungarian Chamber of Commerce and Industry (MKIK) that the SME sector would also be allowed by the government to convert foreign currency loans into forint loans. In the first half of the year, financial programs will be set up to allow SMEs to convert their foreign currency loans at reasonable terms, he said.
According to preliminary data from the Hungarian Financial Supervisory Authority, at the end of 2012, SME loans amounted to HUF 3,360 billion, of which nearly one-third – HUF 1,014 billion – was foreign currency loans.
The Hungarian Banking Association said on Tuesday that it would not comment on the prime minister’s announcement.
Bálint Török, an analyst at Buda-Cash, called the intention itself logical, but added that the implementation raises serious questions and that the details are unknown, but one can only speculate on the implementation. The expert pointed out that, as it is likely to affect a larger portfolio than retail foreign currency loans, the conversion of SME loans may have an even greater impact on exchange rates, including the forint.

Companies that export a lot are more likely to have debt in foreign currency

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But SMEs that have taken out foreign currency loans because of the cheapness of the loan would be willing to convert, he said. Bálint Török explained that both market and non-market based conversion raise several issues, mainly because, in his view, there is hardly any solution with which neither player suffers a loss of interest.
The analyst said that it would not be worthwhile to swap foreign currency loans on the market, mainly because the forint is weakening at the moment. If loans are converted to forint on a non-market basis, the question arises as to who bears the cost. According to Bálint Török, the role of the National Bank of Hungary (MNB) may arise here, or the central bank may share the costs with the financing banks.

Conversion at the exchange rate may cost several hundred billion forints

Conversion at the exchange rate may cost several hundred billion forints

Which cannot be borne by the general government, thus leaving the reserves of the MNB or the banks.
According to Bálint Török, it is difficult to elaborate and complete the conversion within a few months, and it should also be taken into account that Mihály Varga, Minister of National Economy, said he wanted to negotiate a solution with the banking sector regarding the conversion of retail loans.
Transferring the costs of conversion to banks would not be logical either, according to Bálint Török, nor is it obvious that the aim is to boost lending in Hungary. According to the expert, there could also be public funding through the public banking system (MTI).

Most loans were taken for used homes last year

Housing loans increased by a tenth last year, and mortgages borrowed by a third, with most loans being used for second-hand housing, according to the latest data from the Central Statistical Office (CSO).

According to CSO data, the housing loan portfolio was HUF 3,324 billion on December 31, 2018, up 10.3 per cent from the end of 2017, while its ratio to GDP was one year earlier (7.9 per cent). By the end of 2018, foreign currency loans amounted to only HUF 3.5 billion.

Within the total loan portfolio

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The proportion of unsecured loans continued to increase from 79 percent at the end of 2017 to over 82 percent.
The rating of home loans has changed since last year and the previous categories (problem-free, special attention, below average, dubious, bad) have been replaced by performing and non-performing.

Based on the new rating categories, the ratio of performing loans reached 95 percent, covering the problem-free loans ratio in 2017 (93 percent), while the 5.1 percent of defaulted exposures essentially follow the combined ratio of below-average, doubtful and bad ratings (4.4 percent in 2017). Restructuring mortgages accounted for 1.4 percent of overdrafts, compared with 33 percent for non-performing loans (in the latter case, every third loan was restructured).

According to the previous rating categories

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By December 2017, 16,000 borrowers were overdue between 31 and 60 days, 29 thousand borrowers had over 61 days, and according to the new rating applied from 2018, the number was 34 thousand.
In 2018, the number of loans approved increased by 13 percent and one-third compared to the previous year. The average per capita loan reached HUF 7.9 million in 2018, which is HUF 1.2 million more than in 2017.

Last year, 8.4 percent and 7.8 percent of the total number of approved home loans were publicly subsidized, down 14 and 15 percent from the previous year. The number of government-subsidized loans has decreased by nearly one-third, by 29 per cent, since 2017, while the number of unsecured loans increased by nearly 17 thousand (20 per cent) and by HUF 238 billion (43 per cent).
In 2018, financial institutions disbursed nearly 109,000 home loans worth HUF 823 billion. Compared to the previous year, the number of loans increased by more than 4 thousand (4.1 percent) and its amount increased by HUF 218 billion (36 percent).
Home loans continued to dominate the purchase of used homes, with seven out of ten disbursed home loans serving this purpose. Loans for second-hand homes increased to HUF 596 billion last year, 35 percent more than a year earlier. Loans for construction increased by 4.8 per cent and their loans by 17 per cent. The average loan amount increased by HUF 500,000 to HUF 4.8 million.

Loans for the purchase of new homes increased faster

Loans for the purchase of new homes increased faster

Nearly one-third, almost doubled. Accordingly, the amount of the loan for the purchase of a new home increased from 7.6 million to 11 million forints in one year. Together, loans for the construction or purchase of new homes accounted for nearly a quarter of the loan taken for the purchase of a second-hand home.
Based on a comparison of second-hand home purchase loans and second-hand home purchase transactions, home loan purchases exceed 40 percent.
The number of modernization and extension loans increased by 1,533 (11 percent) in 2018, up by 8.8 billion forints (a quarter), while the average loan value increased from 2.6 million to 2.9 million forints.
The average maturity of housing loans disbursed in 2017 was 14.8 years, rising to 15.3 years by the end of 2018. Housing loans have the longest maturity, reaching 17.5 years, followed by new home purchase loans (17.4 years), but the maturity of second-hand home loans is also over 15 years.