Practically all foreign currency loan contracts will have to be converted into forint denominated loans, Government Spokesperson Zoltán Kovács said at a press conference on Monday. He also said that an agreement is yet to be reached on the interest rates of converted loans.
Banks will renegotiate every contract with clients, Zoltán Kovács said, noting that since 2011 the law states that only people with a foreign currency-based income may have a foreign currency loan.
He added that based on legislations in effect, only under special conditions will it be possible to retain a foreign exchange loan. In response to a question, he also said that the planned regulation on fair banking will apply to those who choose the conversion to forints.
At the weekend, the Government came to an agreement with the Hungarian Banking Association on issues relating to the HUF conversion of foreign currency debts, a priority goal of which was to ensure that repayment instalments will decrease by some 25 to 30%.
With the agreement and a bill to be submitted to Parliament, an era of bad practices, which has done much harm to Hungarian families, will come to an end.
In response to a question, Mr. Kovács said the Government had decided on the HUF conversion of foreign currency loans now to avoid possible financial manipulations and exchange rate risks, following talks with all stakeholders involved. There are 350 thousand foreign currency debtors and each contract is an individual case, the Spokesperson underlined, adding that whereas in the case of loans taken out prior to 2007 foreign currency debtors may be at a slight advantage due to the relatively shorter loan duration and various technicalities, post 2007 forint debtors will find themselves in a more favourable situation.
On the whole, the Government has succeeded in fulfilling two principles, i.e. finding a solution to eliminate foreign currency loans as well as ensuring that forint borrowers will not be any worse off than foreign currency debtors, Mr. Kovács stressed.
(Prime Minister’s Office)
