The conversion of car and personal foreign currency loans into forint loans started on Tuesday.
The installments could rise for those who are in arrears with repayments or those who had a so-called bullet construction, in which some of the losses resulting from exchange rate movements were added to the principal. Such clients can, however, ask their bank to lengthen the term of the loan, Freisleben said.
The conversion affects some 242,000 existing FX loan contracts, including nearly 216,000 active car loan contracts and over 26,000 non-mortgage free purpose loan contracts. Among the more than 83,000 cancelled contracts, those in foreign currency will also be converted.
Parliament passed legislation on the conversion of FX retail car and personal loans into forints in September. Retail FX mortgages, which made up the bulk of the retail FX loan stock, were converted under late 2014 legislation early this year.
As opposed to the mortgage conversion, the conversion of car and personal loans is not mandatory to the borrower. They can opt out of the scheme if they reject in writing the conversion offer sent to them by their bank. Banks must prepare the offers by December 15 in the case of operating contracts and by January 31, 2016 for already cancelled loan contracts.
The conversion will happen at a fixed exchange rate using the MNB fixing on August 19, which was HUF/CHF 287.22 and HUF/EUR 309.20. The exchange rate for the borrower will, however, be the rate used during the mortgage loan conversion – HUF/CHF 256.47 and HUF/EUR 308.97, with the state and banks paying 50%-50% of the difference.
The new forint contracts will be annuity-based as a rule. Installments cannot rise more than 15% in the case of loans with an original term of less than 12 years and by a maximum 25% for longer loans, and the interest and all charges cannot become unfavorable to the borrower.
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