The MNB said such loans present “elevated risk”. Banks acknowledge this risk and understand possible steps by the MNB to manage the problem, it added. The banking association estimates lenders could convert just 10-15% of their FX personal and car loans acting on their own, given the large number of such contracts and individual agreements with borrowers, but it is “constructively seeking a definitive solution”.
The government and the MNB will evaluate banks’ proposal and could proceed further along those lines, the MNB said. The MNB said that settlement due under borrowers relief legislation had reduced repayments on personal and car loans only by about 5%, while the marked strengthening of the Swiss franc had increased repayments.
It also noted that one-third of the car loans were back-loaded, with repayments rising as much as ten-fold near the end of the maturity. The MNB put the stock of FX personal and car loans at HUF 300 bln, tied to some 250,000 contracts, and warned of “cross-contamination” as the holders of those loans struggle to make repayments on their mortgages.
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