Opposition urges govt to help Swiss franc borrowers
The main opposition Socialists have called on the government to find a solution to ease the burden of home owners whose loans are in Swiss francs, after the forint hit record lows against the currency over the past few days.
The forint plunged to an all-time low of 252.70 against the franc early Wednesday morning, recovering to 248.63 by 9:10 a.m.
Analysts said earlier the watershed is at around HUF 240 to the franc, at which point borrowers would default on their payments en masse. Many borrowers took out Swiss-franc loans when the forint was at levels around 165.
Tibor Szanyi, a Socialist lawmaker, told a press conference on Tuesday that loan contracts should be renegotiated based on the principles of product risk management, which is a practice well known in the EU. He said that in this way banks would not be able to transfer exchange rate risks entirely to the customer.
\"The fixed-rate solution proposed by Fidesz only prolongs the problem,\" Szanyi said, adding that those who are having difficulty with payments now are not likely to be able to pay later either.
The government encourages forex borrowers to take advantage of the fixed exchange rate option from August 15, the prime minister\'s spokesman Peter Szijjártó said in response to opposition calls for more government assistance on Tuesday.
He said the government had no plans to widen the eligibility for a deal it had reached with banks earlier in what he called \"tough talks\".
Troubled borrowers were recently given the option by the government of fixing their monthly repayments at HUF 180 to the franc until 2014. The scheme will start on August 15.
Szijjártó said the fixed-rate option will allow families to plan better with effectively lower monthly payments. He rejected criticism that the accounting of payments will be unpredictable, and insisted that banks would not be allowed to raise payments by more than 15% beyond 2014, when the scheme expires.
He added that previous Socialist governments are to blame for \"encouraging families to take out forex loans\", as a result of which now nearly half of public debt is in foreign currencies.
János Völner, deputy parliamentary group leader of the radical nationalist Jobbik party said on Tuesday that the strong exchange rate will not only hurt forex borrowers but \"pull the whole real estate sector along\" which means this is a problem which affects society as a whole. He suggested the government should allocate more funding for the planned National Asset Manager, a body to be set up in the autumn with a budget of HUF 2 billion (€7.46 million) for this year and HUF 5 billion (€18.66 million) in 2011. The asset manager is intended to help finance smaller home purchases or conversions of ownership to rental contracts for borrowers forced to default on their home loans.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.