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Hungary wants to cap forex borrower repayment rise at 15%

Hungary's government wants to cap the increase in foreign currency-denominated mortgage repayments for borrowers who join an assistance program at 15% after the program ends, the state secretariat for government communications said on Wednesday.

A government decree on the cap has not yet been published, the secretariat said.

Borrowers may participate in the assistance program from Friday, August 12.

The legislation establishing the program fixes the exchange rates on repayments for borrowers that avail of the program for a period of 36 months but no longer than the end of 2014.

The rate for Swiss franc-denominated loans ─ once the most popular retail lending product in Hungary ─ is set at HUF 180 to the franc.

The rate for euro-denominated loans is set at HUF 250 to the euro, and the rate for yen-based loans is set at HUF 200 to 100 yen under the law.

The balance resulting from the difference between the fixed rate and the market exchange rate will be put on a special, forint account. The interest rate on the special account is to be pegged to the three-month BUBOR.