Top court rejects complaints against FX loan conversion legislation
Budapest, December 2 (MTI) – Hungary’s Constitutional Court rejected requests to declare legislation on the conversion of retail FX mortgages into forint unconstitutional, the court said on Wednesday.
The main aim of the obligatory conversion of the FX loans into forint ones was to defend debtors against eventual FX rate movements, the Court said. Also, the high ratio of FX or FX-denominated contracts within the lending stock constituted a risk to lenders and, thereby to the stability of the whole financial system.
The conversion was taken with a view on the general interest of society and came after significant changes in the environment that hurt the interests of many, therefore it intervened in contractual freedom in line with the constitution, the Court said, noting that such intervention does not necessarily go against the constitution.
Parliament passed legislation on the conversion of FX retail mortgages into forints in November 2014 which made the conversion, which happened at a fixed exchange rate, mandatory, with a few exceptions. Most of the remaining FX loans will also disappear under legislation on the conversion of FX retail car and personal loans passed in September.