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Hungary banks buy €235m from central bank for early FX repayment schemes in Oct

Banks bought a total of €235m or HUF 69bn from the National Bank of Hungary (MNB) in October for the early repayment of foreign currency-denominated mortgages, MNB figures on the money paid out on accepted bids at its four euro sales tenders held last month show.

The MNB accepted €890m or HUF 262bn worth bids by banks at the tenders held in October.

Settlement of the euro purchases accepted at the tenders do not take place until the early repayment of the FX loans take place, until which time the MNB rolls over the euros in spot/next EUR/HUF FX swaps.

The MNB launched a series of weekly regular euro-for-forint tenders on October 3 in an effort to give banks sufficient liquidity to handle early repayment of foreign currency-denominated mortgages by retail borrowers under a recently launched government scheme.

Under the government scheme, launched at the end of September and open for applications until the end of December, borrowers may repay, in full, foreign currency-denominated mortgages at a discounted exchange rate. Banks must shoulder the difference between the discounted rate and the market rate under the scheme. The repayments must be completed within 60 days after application.