Central European Daily

The Hungarian parliament approved the expansion of foreign currency denominated loan “rescue program”. From February 2014 those debtors who have more than 90 days delay of the monthly instalments, but less than 180 days can step into the existing fixation system, where the loan is calculated at 180 in case of CHFHUF and at 250 in case of EURHUF for five years. The differential between the market rate and fixed rate is accumulated on a new HUF loan account in case of the capital for 5 years, while the interest part is taken over half by the government and half by the banks. Additionally the government will give bank guarantee on the new HUF loan only if the banks cut back the size of the loan on the level of 95% LTV ratio for those who have more than 90 days delay. As the banks have already created provisions behind these loans it won’t create additional loss for the bank sector. The NPL ratio stays around 18%, so this opportunity may decrease the level of monthly instalments by more than 30% for more than 100thousand people, if they want to use this tool. Based on the NBH’s survey it is a big question, as 25% of the asked people are still waiting for better options, 20% has lack of confidence about the new loan and 30% has fear about that after 5 years their monthly instalments may jump substantially. So far (more than 1 year) 50% of the people – who are eligible – started to use this tool.