Bloomberg News

Hungary Cooperatives Get $130 Million in Loan Refinance Requests

December 13, 2011

Dec. 13 (Bloomberg) -- Hungarian savings cooperatives received requests for $130 million in loans from borrowers wishing to repay their foreign-currency mortgages at below- market rates, according to data through Nov. 15 from the National Association of Savings Cooperatives.

The savings cooperatives have already issued 4.5 billion forint ($20 million) in domestic currency loans to customers seeking to refinance primarily Swiss-franc denominated mortgages, the association said in an e-mailed statement today.

“Demand for forint loans is rising steeply as we near the end of the year,” Antal Varga, head of the association said, according to the statement.

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.

Hungary’s competition authority started an investigation last month against seven commercial banks suspected of cartel activity after the lenders tightened their mortgage lending criteria and raised interest rates “significantly,” the watchdog said on Nov. 23.

Borrowers have until the end of the year to notify their banks that they wish to take part in the repayment plan.

The central bank estimates that 20 percent of a total 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.

--Editors: Tim Farrand, James Gomez

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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