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Report: Forex mortgage loan relief proposal scrapped

MNB

The controversial, radical and potentially incredibly expensive proposal to retroactively rework mortgage loans based in foreign currency has been scrapped, according to a source in Hungarian daily newspaper Népszabadság today. 


Announcement of the proposal, along with the well-publicized dumping of OTP Bank shares by CEO Sándor Csányi last week, helped trigger recent losses for OTP on the Budapest Stock Exchange.

While Csányi reassured yesterday that the bank “would survive any bailout package for forex [loan] borrowers,” MTI noted in assessing the exchange upon close that “OTP is still down 12.60% since July 15, when the government first aired its intention to resolve foreign currency housing loans for private individuals. Depending on the method and scope of the scheme, analysts expect the new burden on banks to be anywhere between HUF 80 billion and more than HUF 1 trillion.”

Népszabadság’s source close to the prime minister stated that alternative methods would be sought to assist those with forex-based loans, including possibly forcing on banks the exchange-rate difference between current market rates and the original loan rates. A plan is expected to be finalized in the next three to five years, according to the same source. 

National Economy Minister Mihály Varga is meeting with representatives of credit and financial institutions on the issue today.

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