ECJ rules forex-based loan questions up to Kúria
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.
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