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AXA Bank to suspend forex lending because of changed regulations

AXA Bank Europe is suspending its foreign currency-based lending in Hungary from July 16, the bank told MTI.

AXA made the decision in response to recent changes to regulations that practically freeze the market for foreign currency-based lending, the bank said. AXA acknowledges the government's wish to improve the currency structure of banks' lending portfolios with the new initiatives and the halting of retail foreign currency-denominated lending, it added.

If the market and legal conditions in Hungary change, especially if legislation ensures a healthy regulatory framework for euro-based mortgage loans, AXA is prepared to reconsider its stand on euro-based lending, the bank said.

Regulations in force from June require Hungary banks to establish the maximum amount a retail borrower is capable of repaying each month based on an evaluation of their income. Banks are allowed to sign contracts for no more than 80% of this monthly “lending limit” in the case of euro-denominated loans and 60% in the case of loans denominated in other currencies.

Regulations in force since March 1 require banks to limit the loan-to-asset ratio on retail mortgages. The amount for which lenders may sign a home mortgage contract is limited at 75% of the home's value for forint loans, 60% for euro-denominated loans and 45% for loans denominated in other currencies. Vehicle leases are capped at 80% of the value of the vehicle for forint loans, 65% for euro-denominated loans and 50% for loans denominated in other currencies. (MTI – Econews)