Banks will be able to apply from June 1 to receive the "consumer-friendly home loan" certification the National Bank of Hungary (MNB) is introducing for mortgages to counter high interest margins and the low rate of borrower refinancing, the central bank said on Friday, as reported by state news wire MTI.
The introduction of the certification seeks to establish mortgage loans that are transparent and have easily comparable prices. The MNB hopes to stimulate competition among lenders with the standardized mortgage scheme and make home loans cheaper for consumers.
The central bank announced early in March that it would be introducing mortgage certifications and over the past two months has held "intense consultations" with market players and representatives of consumers on finalizing the details of the certification.
To get the consumer-friendly certification, home loans will have to have an annuity repayment model and fixed interest rates set for 3, 5, or 10 years or the whole duration of the contract. Banks must conclude their credit assessment for home loans within 15 days of valuing a property and, once consumers meet the required criteria, loan disbursements must begin within two working days.
In addition, the credit spread on the loan must not be higher than 3.5 percentage points, or 350 basis points, compared to the reference rate used by the lender. The disbursement fee will be capped at 0.75% of the total loan, but must not be higher than HUF 150,000.
Early repayment is capped at 1% of the early loan repayment amount, but if consumers use funds from home savings banks then early payment is free of charge.
The MNB said that if banks start applying for the certification then certified products could enter the market by summer and by autumn the central bank will set up an online site for their comparison.