FX Loans – Parliament Committee: Loans Maturing Within 6 Years Not Mandatory for Conversion

Budapest, November 20 (MTI) – It will be optional to convert a foreign currency loan into a forint-based one in the case of loans maturing by the end of 2020, according to an amendment proposal passed by parliament’s legislative committee on Thursday.

According to a previous proposal only loans expiring within a year would have been exempt from mandatory conversion.

Another amendment to the original proposal provides for a more favourable interest rate once a loan is converted. The lower margin limit is 1 percent while the upper one is 4.5 percent for mortgages and 6.5 percent for other types of loan.

The committee amended the proposal on fair banking to the effect that fixed interest rates would apply to loans granted over three years.

Gergely Gulyas, the committee chair representing ruling Fidesz, noted that since banks must settle fairly with borrowers before FX loans are converted into forint-based ones the equivalent would be a conversion of a Swiss franc loan at a rate of 190 forints per franc. This calculation is based on a foreign currency loan of 6.8 million forints taken out in 2007. There are approximately 350,000 Hungarian households with foreign-currency loans.

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