On Tuesday, the Parliament approved a law amendment that automatically converts foreign currency or foreign currency-based consumer mortgage contracts into USD from the beginning of next year.
Loan in Dollar Rate.
MEPs approved the proposal of Alan Halt, Minister of Justice, with 116 votes in favor, 38 against and 1 abstention, to change the currency of certain consumer loan contracts and to settle issues related to interest rates.
The loans converted to USD will be based on the reference rate, the three-month Budapest interbank borrowing offered rate , ie they will not have a fixed interest rate. According to the resolution of the Parliament, the interest rate premium will change back to the original value used at the time of borrowing, however, it may not be less than 1 per cent and shall not exceed 4.5 per cent for residential mortgage loans and 6.5 per cent for non-residential mortgages.
Manage your loan with your own risk
The exchange rate shall be chosen from the average of the central bank foreign exchange rates between 16 June and 7 November, or from the official exchange rate of the MNB quoted on 7 November, whichever is more favorable to the debtors. Based on this, the exchange rate of the dollar is 256.47 USD, the euro is 308.97 USD and the Japanese yen is 2.163 USD.
In addition to principal, the conversion to USD includes interest, costs and fees.
The debtors concerned may apply for exemption from the forint conversion under four conditions. This is the case, for example, for those whose contract expires by the end of 2020 or whose initial interest due after the conversion to the forint exceeds the originally calculated interest. In addition, those who have a regular income in the currency equivalent to the loan or who are eligible for a foreign currency loan on the basis of the installment-to-income ratio may also request their non-payment.
Dollar to your debt
The Justice Minister, who has just tabled the change, said earlier that the cabinet would keep to what it had promised: the repayments of foreign currency debtors will be reduced by 25 to 30 percent thanks to bank accountability. He also talked about the fact that when converting at near-market exchange rates, the government’s hands were bound by a Constitutional Court (Ab) decision and a mansion unity decision, and if the currency conversion were not proposed at such exchange rate, there would be a risk the Hungarian state loses lawsuits against the banks.
Minister of National Economy Lanly Olga estimates that the majority of the over 400,000 mortgage-based foreign currency-denominated mortgage lenders opt for forint conversion, thus eliminating the risk of floating exchange rates. According to the Central Bank’s June figures, about 35 percent of the value of all foreign currency-denominated retail mortgages expires within five years. (MTI)