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UPDATE - Household debt drops with preferential FX loan repayments in December

Hungarian households made more repayment in foreign currency than borrowed in forint in December 2011, the National Bank of Hungary (NBH) reported on Tuesday. Most of the FX repayments and all forint borrowing in the month were made under the government’s preferential-rate FX mortgage repayment scheme.

Forint loans financed about one-third of the preferential-rate early FX mortgage repayments in December, the figures reveal, with the remainder coming from savings.

Transactions reduced household debt on domestic bank loans by HUF 226.1bn and the weakening of the forint raised it by HUF 77bn in December. The debt fell by HUF 149.1bn to HUF 8,506.3bn at the end of 2011.

Households repaid net HUF 288.8bn foreign currency denominated loans in December, of which FX loans worth HUF 259.9bn at market value were repaid under the government scheme which allowed retail borrowers of FX mortgages to make full early repayment of their loans at preferential exchange rate. The borrowers paid banks HUF 188.4bn at the preferential rate, with banks covering the gap.

Retail borrowing in forint rose HUF 62.2bn in December, with HUF 63.1bn -more than the total net rise - stemming again from the the early repayment scheme, from forint loans raised to help the early repayment of FX mortgages.

Including the (forint) loans taken out, households raised their deposits by HUF 97.8bn in December, NBH figures detailing financing transactions show. They also sold domestic investment fund units worth HUF 17.5bn and domestic listed shares worth HUF 13.9bn.

Household forint deposits rose HUF 104.2bn in December to HUF 6,706.9bn at the end of the month. Foreign currency deposits fell HUF just HUF 2.3bn to HUF 1,085.8bn as the weakening of the forint offset about two-thirds of the decline caused by the HUF 6.4bn withdrawals.