In move meant to help banks, lawmakers re-introduce non-accessory mortgages

Analysis

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The Hungarian Parliament approved legislation today re-introducing non-accessory mortgages in Hungarian law, bringing back the “independent mortgage”, which allows banks to get cheaper credit by putting up the collateral of their borrowers, Hungarian news agency MTI reported.

“The independent mortgage – through home market lending – can contribute to keeping interest rates low. Additionally, the use of independent mortgages is very advantageous in that it can broaden secure retail investment and savings opportunities,” the justification attached to the law said, according to MTI.

Re-introducing non-accessory mortgages will lower home loan rates by about half a percentage point, state secretary Pál Volner said before the amendments were submitted to the Parliament. Non-accessory mortgages allow lenders to use borrowersʼ homes as collateral to get cheaper financing, which translates as cheaper credit, he explained. He added that safeguards against double enforcement of mortgages would be built in to the Civil Code, according to MTI.

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