ADVERTISEMENT

ECJ rules forex-based loan questions up to Kúria

Issues

An European Court of Justice (ECJ) opinion released today states that it is up to the Hungarian court to determine “whether the consumers were in a position to understand that they would be subject to additional expense by reason of the difference between the two rates of exchange” in connection with a lawsuit over mortgages denominated in foreign currency.

According to Advocate General Wahl, “contractual terms which provide, in respect of the advancement of a loan in foreign currency, for the use of an exchange rate which differs from that used for the repayment of the loan are not necessarily exempt from an assessment as to whether they are unfair. 

“While such terms may, in principle, be considered to be included within the main subject-matter of a loan contract denominated in foreign currency, it is nevertheless for the national court to determine whether the consumers were in a position to understand that they would be subject to additional expense by reason of the difference between the two rates of exchange.”

The Kúria, Hungary’s supreme court, ruled in December that forex-based loans were valid, but said it was waiting for the European Court’s stand on questions regarding unilateral changes to loan contracts by banks as well as exchange rate margins.

In January, Fidesz parliamentary caucus leader Antal Rogán urged the Kúria to take a decision on forex-based loans as soon as possible, without waiting for the European Court to take a stand on the related issues.

Hungary’s government has taken several measures to assist borrowers with forex loans but is still seeking a solution that will phase out the loans.

Inexpensive Swiss franc-based loans were once the most popular retail lending product in Hungary, until the weaker forint caused repayments to grow, pushing many households close to default.

European Court may review exchange rate margins in FX loan contracts
Also noted by the national news agency today: The European Court of Justice may review exchange rate margins in foreign currency-denominated loan contracts to determine if they are unfair, Advocate-General Nils Wahl said in an opinion on a case involving Hungary on Wednesday.

ADVERTISEMENT

Rate-setters augur slower decline in CPI in 2022 Analysis

Rate-setters augur slower decline in CPI in 2022

Lawmakers approve residency permit for digital nomads Parliament

Lawmakers approve residency permit for digital nomads

The strongest move - Morgan Stanley Hungary head and Chess F... Podcasts

The strongest move - Morgan Stanley Hungary head and Chess F...

ITM, capital gov't agree on support for public transport City

ITM, capital gov't agree on support for public transport

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.