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FX car and personal loan legislation drafted according to governmentʼs agreement with lenders

Telco

Jessica Fejos

Hungaryʼs government will honor its agreement with the European Bank for Reconstruction and Development (EBRD) in the course of seeking a solution for borrowers with foreign currency-denominated vehicle and personal loans, National Economy Ministry state secretary András Tállai said at a press conference on Monday, Hungarian news agency MTI reported. 

(Photo: Jessica Fejos)

Under the agreement, the government promised to consult with lenders before introducing measures that could burden them.

Tállai said a solution for borrowers with FX vehicle and personal loans should involve a written agreement that is acceptable to the Hungarian Banking Association. The government is counting on the participation of the National Bank of Hungary, as well, he added.

The ministry has already drafted legislation on such a solution and will present it to the government at the next cabinet meeting, he said. The draft legislation would also apply to FX leases, he added.

National Economy Ministry Mihály Varga said last Thursday that the government would offer assistance to borrowers with FX car loans similar to that received by households with FX home loans. The cabinet will soon decide on the conversion of FX vehicle loans into forints, ensuring more favorable conditions for those affected than the currently available, Varga said. He noted that Hungarians have more than 200,000 FX vehicle and personal loan contracts with a value of almost HUF 300 bln.

Tállai said that some 30,000 borrowers with FX or personal loans also have a mortgage and warned against the risk of cross-contamination. He said the draft legislation would make the matter of opting to participate in the solution voluntary. He noted that most lenders had already offered to convert FX car loans into forints when FX mortgages had been converted, but few borrowers had acted. The draft legislation should offer an incentive, for both borrowers and lenders, to opt for the solution, he said.

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