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Banks cover about 46% of early FX repayments from central bank euro tenders

Lenders used euros purchased from the National Bank of Hungary to cover about 46% of early repayments of foreign currency-denominated mortgages in the first two months of a government scheme, fresh data from the central bank show.

The scheme, launched on September 29, allows early repayment of forex mortgages at discounted exchange rates. Borrowers must declare their intention to avail of the scheme by the end of 2011. Full repayment must be made within 60 days of the declaration.

At the beginning of October, the MNB started selling banks euros for forints in a series of weekly tenders aiming to give lenders the necessary liquidity for the scheme.

In the period till the end of November, the MNB accepted total offers for €1.21bn or HUF 360bn in the tenders. However, settlement does not take place until repayment; thus, actual purchases of euros by banks came to €526m or HUF 155bn during the month, that is, about 46% of all repayments reported by financial market watchdog PSZAF.

PSZAF said early in December that repayments under the scheme came to HUF 338.9bn, at market rates, by November 27. Borrowers repaid just HUF 248.8bn, because of the discounted exchange rates.