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Lenders compensate FX borrowers HUF 393,000 on average

MNB

Hungarian FX borrowers were each awarded HUF 393,000 in compensation, on average, for unfair practices exercised by lenders during a settlement period that wound up in the spring, data compiled by the National Bank of Hungary (MNB) reveal, according to Hungarian news agency MTI.

Prior legislation required lenders to compensate borrowers for using exchange rate margins when calculating repayments on FX loans as well as for making unilateral changes to contracts. Simultaneous to the settlement, most retail borrowersʼ FX loans were converted into forints.

Based on detailed data received from lenders from the first phase of the settlement, the MNB said mortgage borrowers were awarded HUF 718,000 in compensation on average, while other FX borrowers, such as those with car loans, received HUF 201,000 apiece. The compensation was applied to borrowersʼ outstanding balances, as a result of which repayments fell by HUF 20,000 a month on average. The average monthly repayment for a home loan denominated in Swiss francs, once the most popular retail lending product in Hungary, fell by about 25% to HUF 77,700, while the principal was reduced by some HUF 1.5- 6.5 mln. At the same time, interest rates on such loans dropped by more than 150 bp to 4.28%, the MNB noted.

The compensation lenders paid amounted to HUF 734 bln. It was awarded to the holders of some 1.9 mln loan contracts.

Borrowers were saved another HUF 341 bln through the mandatory conversion of their loans into forints at fixed rates, according to the data.

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