Ending the moratorium on foreclosures and evictions could cause a supply shock and drive down home prices, thus it is in banks’ best interest to gradually clean out their portfolios, National Bank of Hungary experts said in a document published on its website on Thursday.
The experts suggested that a state-regulated process, namely a state-established quota system, based on number of properties rather than stock of loans, could better control market trends and the pace at which banks clean out their portfolios.
Retail borrowers with Swiss franc-based mortgages — more popular than forint mortgages before they were banned — saw their repayments rise as the forint weakened during the crisis, prompting Hungary’s previous government to introduce moratoriums on foreclosures and evictions by lenders. The moratorium has been extended several times, most recently until July 1, 2011.
Overdue payments have been seen on more than 117,000 foreign currency-denominated mortgages because of higher installments, according to the government’s updated Structural Reform Program.
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