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FX loans: Clearing out the attic

One-fifth of FX debtors are likely to go for early repayment, a recent poll reveals. However, banks would lose nearly HUF 200 billion on the deal, the poll says.

Although 36% of debtors with foreign currency-based mortgages would like to choose the early repayment option the government is now offering, only 19% of them have the means to do so, according to a recent poll by market researcher TNS Hoffmann. The report states that between 150,000 and 185,000 debtors are likely to opt for the early repayment scheme.

Those who are able to cast off the weight that is their FX mortgage have several options to choose from. More than 50% of them said they would use their own savings or turn to family members for help. Some 40% of them want to convert their FX-based loans into forint-based ones to finance the transaction, while 9% of respondents have no definite plans at the moment.

Among those able to repay their loans early and saying they definitely would do so, young families with small children are overrepresented. The heads of these families are usually under 30, and work either at middle or top management level or have their own company.

Those that are uncertain about early repayment but would be able to do so are usually middle-aged couples between 30 and 49, and surprisingly, they have higher income than those that are certain about opting for the scheme.

Couples above the age of 50 with no or grown-up kids and couples between 30 and 49 with lower education – and, in general, lower income – said they either could not or did not want to opt for early repayment.

The poll also detailed immediate losses banks would suffer on the exchange rate differential, stating that the extent of losses depends on several factors. If approximately 150,000 debtors choose early repayment, banks will have to face total losses of some HUF 175 billion.

If the number of early repayers reaches 185,000, the immediate loss of the banks is expected to be around HUF 220 billion, TNS Hoffmann said, adding that this is equal to 75% of the average annual operating income of the entire banking sector in the last five years.