Banks and government to subsidize FX car loan conversion
Foreign currency-denominated vehicle and personal loans will be converted to loans into forints at the market exchange rate, but the government and banks will provide a HUF 31 bln subsidy to effectively lower conversion rates, National Economy Minister Mihály Varga said on Wednesday, according to state news agency MTI.
Opting into the conversion scheme will be voluntary for consumers but banks will not have the right to refuse those wishing to join. The nominal conversion rate for euro loans will be HUF 309.20 and HUF 287.20 for Swiss franc loans. With a HUF 31 bln subsidy the exchange rate will be lowered to HUF 308.97 for euro loans and HUF 256.47 for Swiss franc loans.
Half of the funds for the subsidy will be provided by the government and the other half by the banks. Following the conversion of the loans banks will be prohibited from raising interest rates. The conversion will come into effect on 1 December and will involve 229,000 contracts worth HUF 305 bln, Varga said.
The government and the Hungarian Banking Association signed an agreement on Wednesday concerning the conversion of FX car loans. In addition to active contracts, the forint conversion will also affect HUF 260 bln worth of non-active personal loans and HUF 255 bln of car loans. The measure will also affect leasing contracts, Varga added.
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