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MNB to tighten mortgage adequacy ratio

The Mortgage Funding Adequacy Ratio (MFAR), requiring lenders to back at least 20% of their net mortgage loans with long-term liabilities, will be raised to 25% from October 1, 2019, according to a decree by the National Bank of Hungary (MNB) published in the latest issue of official gazette Magyar Közlöny.

Based on the changes, mortgages or mortgage refinancing solutions should back at least 25% of the mortgage loan portfolio of credit institutions, state news wire MTI reported.

The MNB introduced plans in 2015 for the MFAR to mitigate the mismatch in maturities of forint mortgages, which had runs of ten years or more, and the banking sectorʼs forint liabilities, which typically matured within one year.

The MFAR was introduced at a 15% rate in April 2017, and the rate was raised to 20% in October 2018.