Parlt passes forex-forint conversion legislation

Budapest, November 25 (MTI) – Hungary’s parliament today approved the government’s legislation on the conversion of foreign currency loans into forint ones from the start of next year.

Lawmakers passed the law with 116 in favour, 38 against and one abstention.

Banks must choose the more favourable option for the borrower between a conversion rate based on the average exchange rate between June 16 and November 7 or the official rate of the National Bank of Hungary on November 7. On this basis conversions into forints could be made at 256.47 to the Swiss franc, 308.97 to the euro and 2,163 to the Japanese yen.

The law limits the interest spread above the three-month Budapest interbank offer rate (BUBOR) for converted loans to 1.0-4.5 percent for mortgages and 1.0-6.5pc for other loans.

    The conversion is mandatory, but borrowers may seek an exemption if their loans mature by the end of 2020, if the interest rate on the converted forint loan is higher than the original rate on their FX loan, if they have regular income in the currency of the FX loan, or if their income-to-repayment ratio exceeds the threshold allowing them to take out FX loans.

Economy Minister Mihaly Varga said earlier that the majority of the more than 400,000 borrowers with FX mortgages were expected to convert their loans.

About 35 percent of FX retail loans, in value terms, will mature within five years, according to central bank data from the end of June.

Photo: MTI – Attila Kovacs

Source: http://mtva.hu/hu/hungary-matters