Too much Austrian credit?
Austrian banks may be in trouble because of the large amount of Eastern European placements, according to the IMF.
Until recently, the International Monetary Fund had been mumbling about the blessing of Austrian banks in lending to Eastern European clients or hunting for depositors from there. However, the IMF is now warning that the region’s economic development has come to a standstill (at least to some countries, including our most regrettable and, of course, to our country, of course, due to recent actions), making debt recovery increasingly problematic. Or it could be. Let’s look at what loans Austrian banks are giving. An Austrian loan is always a mortgage loan, meaning you need to raise a high value real estate. This already provides the lending bank with some protection, which can be used to give better credit to Hungarian clients, for example.
To put it very simply
We can say that Austrian banks also lend to people who have been written down by everyone in Hungary. What’s more, the terms are very good: the euro-based loan guarantees low repayments, you only have to pay off the accumulated repayment every three months, and we also pay the principal from the first day, not like in Hungary, where continue to earn interest.
Another appeal to our countrymen applying for Austrian credit is that Austrian banks are unaware of the Hungarian BAR or currently known as the KHR list. So if you do not get a mortgage at home due to some of your old stumbling blocks, you can still get one in Austria and not be asked if you are on the blacklist. Probably the simple credit bureaucrats in the banks do not even know that they are, but if they do, they certainly have no idea how to get there.
So in Austria, the road is open to everyone, you only need one (or more) real estate and another can apply for a loan. Preliminary evaluation is very quick, there is a response within a day, and every brother-in-law has a unique credit, so the amount of the repayment is personalized. The maximum interest rate is less than 8% and the maturity can be up to 20 years if you wish.
Austrian banks have been able to attract many customers
And, of course, we should not be surprised that the IMF warns that real estate loans look very secure, but in fact are on a rather volatile foot. Why? Because if a country is in a difficult economic situation and debtors are unable to pay, the bank will try to auction off the property that served as collateral. This is fine so far, but in a country in a difficult financial situation where payment discipline is a problem, there are likely to be other problems: for example, the real estate market is slumping, so the underlying real estate or properties cannot be sold on real goods. Thus, the Austrian bank does not receive any money and cannot sell the property at the expected price.
This is indeed a serious risk to consider.
Before we think that Austrian banks will now tighten or simply ban Eastern European customers, we would be mistaken. Especially since the IMF also warns that Austrian banks are better off not abandoning their Eastern European lending practices, despite the dangerous signs. Namely, if the money to be withdrawn from Austrian banks was not paid out to Eastern European clients, there would be a vacuum and a shortage of money that no one is really prepared for. It is only certain that many would not be able to obtain credit, and this would have a very profound effect on the economies of the countries. This is obviously confirmed by those who, for some reason, had to turn to an Austrian bank to get money.