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Gov‘t outlines aims for troubled borrowers support package, shares rose high after announcement

An agreement the government aims to reach with banks on assisting troubled borrowers should ensure that no family looses the roof over the heads, that repayments are predictable, and that the burden of the support be shared by the state, banks and borrowers, Prime Minister's spokesman Péter Szíjjártó said on Wednesday.

The government is still in talks with the Hungarian Bank Association on the support package, Szíjjártó added. Retail borrowers with Swiss franc-based mortgages – more popular than forint mortgages before they were banned – saw their repayments rise as the forint weakened during the crisis.

The Hungarian government may acquire the properties of mortgage holders more than 90 days overdue on payment of their loans, online news portal Index reported. It would be part of a plan to help distressed borrowers, Index said citing Dániel Gyuris, head of OTP Bank’s mortgage unit and board member of the Bank Association. Debtors, whose payments are less than 90 days due, will be offered an exchange-rate cap on foreign-currency mortgages, Index reported. The ceiling may be set at 260 forint per euro for euro-denominated loans, according to the news portal.

On speculation the government will stimulate bank lending by helping distressed mortgage borrowers and implement measures to cut public debt, Hungarian shares rose to the highest in almost six months.

The plans to help borrowers may spur bank lending, said Attila Gyurcsik, an analyst at Concorde Securities. “The government is inclined to opt for a market-friendly solution” on mortgages, Gyurcsik said.

“The market has warmed to the fiscal consolidation plans,” Gyurcsik said. “As a result, the forint is gaining.”