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Ban brings signing of new forex loan contracts to practical halt

The signing of new foreign currency-based retail mortgage loans by Hungarian banks came to a practical halt in July as the result of a government ban on such borrowing, fresh data published by the National Bank of Hungary (MNB) on Tuesday show.

The government decided to ban the loans because of foreign exchange rate risks to borrowers at the very end of June, thus the foreign currency-based loans that were signed in July had probably reached the negotiating stage in June. Although legislation enforcing the ban was not signed until early August, Hungary's biggest banks said they would voluntarily comply from the start of July.

The value of new euro-based home loans banks signed with retail clients in July fell to HUF 1.5 billion from HUF 4.2 billion in June and HUF 15.7 billion twelve months earlier. The value of new euro-based consumer loans dropped to HUF 1.2 billion in July from HUF 3.7 billion in June and HUF 13.2 billion in July 2009.

The indicator for the average cost of borrowing, weighted for the size of loans, was 7.54% for euro-based home loans and 9.16% for euro-based consumer loans in July, under the respective 9.99% and 19.24% for forint loans.

The value of new Swiss franc-based loans signed with retail clients in July was a negligible HUF 100 million.

The value of new forint home loans reached HUF 17.9 billion in July, down from HUF 19.9 billion in June but practically level with the HUF 17.8 billion twelve months earlier. The monthly average for the twelve months to July was HUF 9.6 billion.

The average cost of borrowing indicator for the loans was down sharply from 15.06% a year earlier.

The value of new forint consumer loans was HUF 23.6 billion in July, down from HUF 18.1 billion in June but over the HUF 18.9 billion monthly average for the twelve months to July.

The average cost of borrowing indicator for the loans was down from 28.46% twelve months earlier.

Hungarian households placed HUF 1,017.3 billion into fixed forint deposits in July, up from HUF 974.7 billion in June and over the HUF 962.7 billion twelve-month monthly average. (MTI-Econews)