Representatives from banks and leasing companies rejected the proposed ethical code by Hungarian central bank MNB regarding responsible lending practices and moderation of risk involved in foreign-currency-denominated loans at a meeting on Tuesday, the business daily Napi Gazdaság reported on Wednesday.
The bank and leasing-company representatives said that the MNB’s proposed ethical code would excessively reduce the amount of forint-denominated lending and totally freeze foreign-currency-denominated lending. Bank and leasing-company representatives objected particularly to the MNB’s proposal that the total amount of monthly installments that an individual client pays on all loans not exceed 30% of monthly net income in the case of forint-denominated loans and 15% of monthly net income in the case of foreign-currency-denominated loans. The representatives also said that the MNB proposed restrictions on the conditions attached to euro-denominated loans were too stringent. The bank representatives proposed to gauge the maximum value of debt servicing to monthly income, noting that disposable income varies significantly between those earning HUF 100,000 per month and those earning HUF 500,000 per month.
Representatives from banks and leasing companies were more receptive to the MNB’s proposal that collateral on forint-denominated mortgages not exceed 70% of the value of the mortgage on forint-denominated loans and 50% of the value of the mortgage on foreign-currency-denominated loans. Bank and leasing-company representatives agreed on Tuesday to submit their own proposed lending code in a meeting to take place at the end of next week. (MTI-Econews)