Gov’t wants to cut forex loan repayments by 15%-20%

History

Hungary's government wants to find a solution for borrowers with foreign currency-denominated loans that reduces their repayments by 15%-20% from next year, National Economy Minister Mihály Varga said on public television on Friday. 

FX mortgages could be phased out over 3-5 years, Varga said on M1's program "Ma reggel".

Hungary's government has given banks until November 1 to consult with borrowers to find a solution to their big stock of FX mortgages. If they fail, the government will act unilaterally.

Varga said the government would like to reach a professional consensus on the matter, but had to take into account the interests of borrowers. Care must be taken to prevent the Hungarian banking system from “collapsing at the end of the story,” Varga said, acknowledging that banks could not handle losses on the scale of those resulting from an earlier government scheme that allowed repayment of FX loans at discounted exchange rates for a limited time.

Commenting on a suggestion by Hungarian Banking Association head Mihály Patai that FX loans could be phased out only over a period of 10-15 years, Varga said, “We don't have that much time,” adding that “I now see less of a chance for an immediate solution, but a much bigger chance of phasing out these products over a period of 3-5 years.”

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