Voluntary Rate Caps to Fall

Banking

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Economic Development Minister Márton Nagy and representatives of the Hungarian Banking Association have agreed on reductions in lenders' voluntary rate caps for businesses and retail borrowers, according to a report by state news wire MTI.

At a meeting on Monday, the sides agreed that the voluntary rate cap for new business loans would fall from 11.5% to 9.9% from January 1, while the cap for home loan APRs would drop from 8.5% to 7.3%, the ministry said.

An agreement was also reached on winding up the voluntary rate cap measure parallel with the phasing out of the rate freeze for SME loans from April 1, 2024, it added.

The voluntary rate caps were adopted by lenders on October 9, after talks with Nagy. The minister said the government would commit to weighing the phase-out of the corporate rate cap and to starting a review of the cap on retail home loans if the central bank base rate fell under 10%. He also said the government would back the Hungarian Banking Association's plans and efforts related to the regulation of digitalization in the financial sector.

The National Bank of Hungary (MNB) base rate stands at 11.5% at present. After a monthly policy meeting in November, deputy governor Barnabás Virág said the base rate could fall under 11% by year-end and reach the single digits by February 2024.

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