Hungary Loan Plan
Prime Minister Viktor Orban said Hungary’s government expects at least 150,000 to 300,000 people to make use of a plan that allows borrowers to repay foreign-currency mortgages below market rates. Two days ago, Orban said in parliament Hungary plans to enable early repayment of mortgages denominated in euros or Swiss francs at as much as 20 percent below prevailing rates.
In an interview late yesterday, Orban told HirTV “The number of those with the necessary savings who will decide to get out of their loans may be somewhere between 150,000 and 300,000.” Orban added the number may rise as borrowers get help from family and friends and locate any remaining assets they may use to take part in the plan. Swiss francs are dominated Hungarian mortgages with Two-thirds of Hungarian mortgages. Defaults have risen as a strengthening franc sent monthly installments soaring.
On Sept. 9, the Hungarian Banking Association said the repayment plan may have “severe” economic consequences and endanger financial stability. Orban said the plan will impose a time limit for participation so that banks can calculate the impact on their profits. Orban said Hungary has “nothing to lose” because some international banks will still find it profitable to remain in the country and foreign lenders have already been withdrawing money.