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Interest picks up in exchange rate limit scheme

An exchange rate limit scheme under which retail fx borrowers can temporarily cap their repayments, has attracted increased interest at banks in August, reflected both in terms of inquiries and the number of applications submitted to banks, officials at UniCredit Bank and OTP told the business daily Világgazdaság.

From August, banks have accepted all applications from borrowers with mortgage-backed forex loans without any restrictions, including those with non-housing loans. OTP Bank, which opened towards borrowers with non-housing loans, now receives hundreds of inquiries per day, the daily said on Thursday.

In July, the number of those signing a contract on a restructured loan exceeded 70,000 according to figures from the Banking Association, with the stock of loans affected reaching HUF 650 billion, sharply up from HUF 180 billion worth of restructured loans of about 20,000 customers according to MNB figures at the end of June. This means that about 15% of eligible borrowers have availed of the opportunity, and the Banking Association expects the ratio to rise to at least 50%, as does FHB Bank and OTP, the daily reported. CIB Bank, where 17% of those eligible for the scheme have already applied, does not rule out a 75% ratio, and Budapest Bank also expects to see 60–70% participation.

MKB Bank, however, currently believes that the final percentage could be around 15%–20%, Világgazdaság said. Under the exchange rate limit scheme, forex borrowers may opt to cap their repayments for five years. The difference between the rate of repayment and market rates is to be placed on a separate account for later repayment. The scheme opened to public sector borrowers at the beginning of April and for other home borrowers in May. Borrowers have until the end of 2012 to join the scheme, which runs until the end of June, 2017.