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Changes to mortgage bond issue system not timely

Initiatives

Changes to Hungary's system of mortgage bond issues is "not timely", Dániel Gyuris, chairman-CEO of OTP Jelzálogbank, the mortgage unit of Hungary's OTP Bank told MTI on Wednesday, after the National Bank of Hungary (MNB) said it would launch a new mortgage bond purchase program if the circle of issuers of such securities is broadened to include all commercial banks.

The MNB announced the measure among others intended to support banks' capacity to lend.

Gyuris noted the MNB had said in a report published in November 2010 that it was not a good time to change the mortgage issue system because of projections for low demand for credit and declining lending activity which promise low issue volumes. "Activity has been lower than projected in the report, thus the lessons drawn earlier still hold true," he added.

Gyuris said the Hungarian Mortgage Bank Association, on whose board he sits, was open to professional consultations on the matter of the system.

The MNB purchased HUF 7.3 billion bonds on the primary market and HUF 27.4 billion on the secondary market under a previous mortgage bond purchase program launched in FebruaryThe 2010 and terminated in December the same year. The MNB discontinued the program citing no prospect for change in low-growth forint mortgage lending and, consequently, forint mortgage bond issues in 2011.

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