MNB takes view on project financing of residential developments

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The National Bank of Hungary (MNB) has made a recommendation on its website to Hungarian lenders in order to implement uniform risk management principles in the project financing of residential developments.

As a condition of bank financing, in order to prove the safe implementation of the project, the person participating in the residential development must normally present at least 30% of the total net costs as a deposit. They also have to provide proof of their own, and their contractor's, relevant professional background and experience as well as a commitment to contingencies.

The project's own funds and the credit limit that can be drawn down from the financing bank must cover 100% of the costs of the entire residential development, without the money of the future home buyers.

The MNB expects, among other things, the strengthening of the security of (retail) customers taking out loans for real estate purchases, for which purpose the financing banks must ensure that real estat e developers also comply with a number of strict regulations.

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