After the shock of late last year, the home savings market is picking up again; already two service providers, Good Finance and Good Credit, have come up with a new product.
They offer a 5-15% down payment, which is significantly less than the 30% government subsidy taken (not even competing with government bond yields over total capital) and, in some cases, we have to meet significantly stricter conditions to maximize yield . If savings are your goal, you should choose your Good Credit product, but if you want to get a favorable, fixed-rate loan, you should choose Good Finance.
After Home Savings Fund Benefits
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A major storm in October last year saw the government remove a substantial 30% down payment from government savings funds in a matter of days with a single stroke of pen. All four home savings companies have ceased selling their products (Aegon had been a few weeks before the announcement) and then sat down at the management’s desk to rebuild its products with negative net returns in the current interest rate environment without government support. Firstly, in October last year, Good Finance and then a few days ago Good Credit launched their new product, instead of state aid, they are building their business model on bonuses and soft loans. E-Money is the third player expected to return. To our knowledge, their new products are already under MNB approval.
Good Credit offers an interest rate bonus
While Good Finance is trying to replace the state subsidy with a 5% interest rate bonus, Good Credit offers an interest rate bonus of 10-10 + 5% for its longer 120-month contract.
The 10% deposit bonus of Good Credit will only be guaranteed if you choose the longest maturity and + 5% if you take out an Good Credit home loan worth at least HUF 15 million 3 months before or 9 months after the contract is signed. The + 5% bonus is based on the ratio of the loan amount to the LTP contract amount multiplied by the amount of the deposit placed.
What has not changed:
- the costs: the account opening fee is 1% of the contractual amount (deposit + interest + loan), the account management fee is also HUF 150 / month (the account opening fee can still be zeroed within certain promotions).
- For the time being, deposit rates are also unchanged: 0.1% is offered by both providers, and the bonus is not credited.
- The money raised in home savings can still be spent on housing, with a payout period of 2 months.
Which one is better?
The main attraction of formerly state-subsidized products was the return on equity above 10%, while for today’s products the 5-10 + 5% interest rate bonus seems to be quite attractive at first glance, but only 0.43-2.19% return on equity. That is, 5% is 5% as 30% used to be 30%.
We have made some comparisons of the conditions under which the new products of the two cash registers can be found under various monthly payments. In our model calculations, we put $ 20,000 a month and $ 40,000 a month into home savings products, the former was the amount needed to maximize ex-state aid, while the latter was the maximum amount that could be paid at Good Finance monthly to earn a bonus (HUF 50,000 at Good Credit). It is important to note that Good Credit and Good Finance products are available for different maturities;
- for the short term, 58 months at Good Credit and 71 months at Good Finance,
- whereas the long-term maturity is 120 and 112 months.
With a monthly payment of HUF 20,000, the highest HSE (this indicator shows the average annual deposit interest rate adjusted for costs and fees) is 1.28%, which is available at Good Credit for a longer term of 120 months, the lowest HSE and is offered by Good Finance. It is clear that due to the cost, even with deposit rates, home savings yields are negative if no bonus is given.