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Mortgage modification campaign off to sputtering start

About 2,000 borrowers have responded to a campaign organized by the National Bank of Hungary (MNB) and the Hungarian Banking Association and switched their variable-rate mortgages into fixed-rate ones, the spokesman for the central bankʼs market oversight division told Hungarian news agency MTI on Tuesday.

István Binder said the campaign is still targeting borrowers with some 106,000 of variable-rate mortgages who could have their contracts modified to fixed rates, mitigating their risk.

The central bank and banking association launched the campaign to inform borrowers with variable-rate mortgages of the benefits of changing these to fixed-rate ones last spring. By the end of last year, banks had contacted more than 65,000 borrowers - non-delinquent ones with loans maturing in 10 years or more - regarding the scheme, and the rest will be contacted by the end of January 2020, Binder said.

Banks must make an offer in the letters to make the variable-rate mortgages fixed-rate ones and allow clients a period of 30 days to accept.

Borrowers who accept must pay a nominal fee but do not have to pay an origination, early repayment, registration or appraisal fee, because their original loan contracts have only been modified.

MNB earlier estimated mortgages worth almost HUF 900 billion could be affected by the scheme.