Minister Asks Banks to Introduce Voluntary Rate Caps
Economic Development Minister Márton Nagy has asked lenders to apply voluntary rate caps to new corporate and retail credit from October 9, his ministry said on Tuesday, after a meeting with representatives of the Hungarian Banking Association.
Nagy "takes the position that" rates on new loans for working capital credit for businesses should be capped at 12% and that APRs for home loans, for both new and resale properties as well as for home renovation, should be capped at 8.5%, the ministry said.
If banks adopt the voluntary rate caps, the government would commit to weighing the phaseout of the corporate rate cap and to starting a review of the cap on retail home loans if the central bank base rate falls under 10%, it added.
The base rate stands at 13% at present.
The government would also back the Hungarian Banking Association's plans and efforts related to the regulation of digitalization in the financial sector, the ministry said. Concrete proposals could be discussed at the next meeting with lenders, it added.
The sides agreed to continue regular meetings and to revisit the interest rate caps on a monthly basis, the ministry said.
Home loan APRs averaged 10.12% in August, the latest data from the National Bank of Hungary show. The average annualised rate for forint corporate loans, excluding overdrafts, stood at 14.1%, according to the central bank data.
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.