Interest on foreign currency loans converted into forints one will not be allowed to exceed the interest of the original loan under a bill on the conversion submitted by the justice minister László Trócsányi to Parliament on Monday. The only exception to the rule is if the original interest was below a legally set minimum rate — the three-month Budapest interbank offer rate (BUBOR) plus 2%. Banks will have to apply an interest rate that is pegged to the three-month BUBOR. The interest spread over the BUBOR should be the same as the spread on the original loan, but the spread is limited to a range of 2-5.5% for home mortgages and 2-7% for other mortgages.
Meanwhile Antal Rogán, group leader of ruling FIDESZ party, confirmed on Monday that the installments of forex mortgages, now to be converted into forint-based loans, would be 25-30% lower, and “over 90% of borrowers will be better off.” Rogán told a press conference that a relevant court decision had not allowed for the forint conversion to be performed at a preferential rate, however, the burden on borrowers could be eased through reducing the principal and lower interest rates. Rogán argued that Hungary’s new laws on bank settlement, fair banking and forex loan conversion would together facilitate a solution “for the average borrower equal to a conversion of his loan at 190 forints to the Swiss franc.” Parliament could discuss the fair banks and the conversion bills on Friday and vote them into law next Tuesday, he added.
via hungarymatters.hu photo: Lajos Soós – MTI