Banking assoc does not support the government’s mortgage rate freeze

The Hungarian Banking Association on Thursday said it does not support a temporary government freeze of mortgage loan interest rates.
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“The Banking Association cannot support the temporary interest rate freeze, to the detriment of the Hungarian banking sector, for clients who decided to take out riskier, floating-rate loans in spite of several warnings to the contrary,” the professional body said.
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Prime Minister Viktor Orbán announced on Wednesday that the government decided to freeze interest rates on mortgages, at end-October levels, until the end of June 2022.
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The association said it had “learnt with surprise” about the measure on Wednesday.
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It noted that Hungarian lenders, in cooperation with the National Bank of Hungary (NBH), have in recent years offered to switch clients’ floating-rate credit to fixed-rate loans, drawing attention to the benefits of fixed-rate loans in public forums and among their clients.
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The association pointed to the banking sector’s “contribution to pandemic defence” in the form of paying a sectoral tax and participating in a repayment moratorium that extended for a longer period than any other one in Europe.
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A government decision to freeze retail mortgage rates until the end of next June could save Hungarian households 30 billion forints (EUR 81.3m), Csaba Dömötör, a Prime Minister’s Office parliamentary state secretary, said on Thursday.
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The decision about the six-month freeze from January was
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announced by the prime minister on Wednesday.
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The interest rates on retail mortgages will be frozen at their end-October levels, meaning that the monthly installment for February will already be lower than previous ones, Viktor Orbán said.
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Dömötör said that around half a million Hungarians have floating-rate mortgages.
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Without the measure, accelerated rate rises from October could have added 23 percent, or an average 11,000 forints, to borrowers’ monthly installments, he said in a video message posted on the government’s Facebook site.
Source: MTI