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Big FX loan stock still biggest problem for retail borrowers

The large stock of foreign currency-based loans continues to pose the most serious problem in terms of financial consumer protection, Hungarian financial market regulator PSZAF said in a report on Thursday.

Foreign currency-based loans account for 70% of all retail lending stock at present, PSZAF said. About 95% of this stock is denominated in Swiss franc.

As repayments on these loans have grown because of the weaker forint, loan restructuring has become of paramount importance to troubled borrowers.

However, risk is present, from the consumer's point of view, if borrowers have no knowledge of constructions available for easing repayments or if they have insufficient information to take a decision on the matter, PSZAF said.

A broader adoption of loans linked to a transparent reference interest rate would reduce retail clients' vulnerability and risk, the watchdog said.