The interest rates on retail mortgages will be frozen at their October 27 levels, according to PM Viktor Orbán’s Wednesday announcement. This would be equal to a monthly savings of HUF 11,000 (EUR 30) for an average household, according to calculations. On the other hand, uncertainty and perhaps a steep increase may follow after the ruling’s expiration.
The law will take effect next year for a six-month period. In light of the regulation, the February installment February will already be lower than previous ones. The regulation will apply to new mortgages too.
According to economic site Portfolio‘s calculations (made in reference to unconfirmed, perhaps government sources), the move:
It is unclear what would happen once the half year period of the ruling expires at the end of June.
According to money.hu, the risk is perhaps even greater for the banks than just the loss of the aforementioned HUF 20-30 billion, as debtors may face a steep rise at the end of June that many of them would not be able to afford. If, as analysts expect, the three month [Budapest Interbank Offered Rate] BUBOR level reaches 5.5% by June 2022, the installment of a loan with the above parameters will jump from HUF 111,000 (EUR 300) to HUF 129,986 (EUR 351), equivalent to a 17% increase.
In addition, in certain cases, even 25-30% increases may be possible.
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