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Asset manager to help borrowers to be set up this month

Hungary's National Asset Manager, a planned government agency with responsibilities including aiding troubled mortgage holders, will be set up before the end of August, the state secretary in charge of government communications said on Thursday.                 

The new agency will manage the properties of people defaulting on their foreign currency-based housing loans, as well as the controlled-rent units soon to be built for those families, said Zoltán Kovács.

He said borrowers who choose the government's offer to have their installments fixed to an exchange rate of HUF 180 to the Swiss franc for the next 3 years will have a guarantee that in 2015 their repayments will not rise higher 15% above the reduced installments, Kovács said. He added that more details would be published on Friday.

Earlier in the day, the government issued a decree instructing two ministers to propose at what price the National Asset Manager should buy the homes of troubled borrowers, according to the latest issue of the official gazette Magyar Közlöny.

The decree calls on the national economy minister and the national development minister to put forward a proposal by August 31 on pricing homes selected for foreclosure, adjusted to the updated value of the collateral established at the time of the signing of the mortgage contract.

János Müller, a leading advisor to the banking association, told MTI that, according to an agreement between the association and the government, properties would be purchased by Manager at a significantly lower price compared to the original contract.

Hungary's biggest lender, OTP Bank, said besides implementing the state's fixed exchange rate program starting on Friday, it was also preparing to offer its own facility with a fixed exchange rate for struggling borrowers with foreign currency loans.

The bank's deputy chief executive István Gresa told a press conference on Thursday that its fixed exchange rates would be set higher than the state's. Rather than offering 180 forints to the Swiss franc, for example, the rate would be fixed at 200 forints.

Financial analysts on Thursday said the rate of the forint against the Swiss franc was likely to continue climbing in the short run, surpassing 280 to the franc, but it was expected to weaken in the medium term. Consequently more households than originally forecast were likely to take advantage of the 3-year lower rate offered by the banks as part of their deal with the government, Zsolt Kondrát, a lead analyst with MKB Bank said.

Spokesman of the financial supervisory authority (PSZAF), István Binder, on Wednesday said around 123,000 households with mortgages in foreign currencies were over 90 days late with their repayments.

Müller also said that despite the extra burdens associated with the fixed-rate program due to the even higher exchange-rate differences than originally anticipated and greater demand, banks had sufficient liquidity to implement it.

Zoltán Kovács, the state secretary of government communications, told a news conference today that there was no need for any additional measures to those already outlined by the government to help distressed mortgage holders.

Péter Szaló, an interior ministry official, told the same news conference that the government planned to build homes for 80 families between 40 and 80 square meters in the first phase, to be completed by the end of March next year.