Oct. 4 (Bloomberg) -- Hungarian savings cooperatives are offering forint loans to borrowers wishing to repay foreign- currency mortgages at below-market rates, as they seek to regain market share from commercial banks.
The savings cooperatives, which have about 600 billion forint ($2.7 billion) to lend, are offering loans to households at a total cost of 10 percent to 11 percent, in an attempt to increase their market share from the current 20 percent, the National Association of Savings Cooperatives said in an e-mailed statement today.
Hungarian lawmakers approved legislation on Sept. 19 that allows early repayment of Swiss-franc denominated mortgages, which account for most of the loans, at a fixed exchange rate of 180 forint per franc; euro-denominated mortgages can be repaid at 250 forint per euro, provided the loans were taken out at lower exchange rates. Losses will be assumed by banks.
Many people will need new loans to pay back existing foreign-currency loans. Consequently, the largest commercial lenders have tightened up on lending and raised interest rates on loans in a bid to dissuade borrowers from early repayment, news portal Origo.hu said, citing its own survey.
The central bank estimates that 20 percent of a total of 18 billion euros ($24 billion) of foreign-currency mortgages will be repaid at fixed exchange rates below market levels as part of the government plan, Governor Andras Simor said on Sept. 20.
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