National Bank of Hungary (MNB) governor András Simor said earlier in public that rescuing the country’s borrowers with foreign currency-denominated loans would be inappropriate, but what was true at the end of 2008 may not necessarily be true today, MNB spokesman András Simon said on Wednesday, answering a question by a journalist.
Simon responded to a question about a document from the end of 2008 released by anti-secrecy organization WikiLeaks in which Simor said “it would not be appropriate to rescue borrowers with foreign currency-denominated loans”, because “they have to learn in the end that there is no such thing as a free lunch”.
Simor said after a rate-setters meeting in August that he recommended participation in the recently launched state assistance program for borrowers with foreign currency-denominated loans to those who could not make their repayments, the MNB spokesman said.
In the past year, the MNB has taken a number of initiatives and made regulatory proposals in the interest of making the practice of lending in Hungary more transparent and predictable, clearly presenting risks, he added.
The assistance program, launched on August 19, fixes the exchange rate for repayments on the loans and puts the difference between the fixed rate and the market rate on a separate forint account to be repaid later. The program’s rate for Swiss franc-based loans – once the most popular lending product in Hungary – is HUF 180 to the franc, well under the market rate of around 234 late Wednesday.
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