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Coronavirus: Loan Repayments May Not Rise after Moratorium, says Hungary Central Bank

MTI-Hungary Today 2020.03.23.

The National Bank of Hungary (NBH) on Monday said lenders may not raise borrowers’ installments after a moratorium on repayments expires at year-end.

Hungary’s government recently declared a moratorium on payments of principal, interest and fees on all retail and corporate loans until the end of 2020. The measure is one of many rolled out to cushion the impact of novel coronavirus on the economy.

“The [NBH] expects financial institutions to offer solutions which ensure that the postponement of payments will not lead to an increase in debtors’ installments from the original after the payment moratorium ends. This entails an extended maturity for most debtors which ensures that monthly burdens remain unchanged at the original level or below. As a result, repayment is not expected to cause difficulties for customers. In the Bank’s view, the above requirement helps to maintain the equilibrium between creditors’ and debtors’ interests in the current extraordinary situation,” the central bank said.

The NBH noted that the moratorium would affect a total of 3,150 billion forints in principal payments and 450 billion in payments of interest and fees until the end of the year.

Coronavirus & Suspended Loan Payments: Banks Prepared to Work Together with Gov’t

Meanwhile, NBH on Monday started allowing counterparty banks to use loans to large companies as collateral in their transactions with the central bank, and it is applying a uniform 30 percent haircut on the loans accepted as collateral.

The measure will raise the stock of bank’ assets eligible as collateral by 2,500 billion forints from 7,000 billion, the NBH said.

In the featured photo: National Bank governor György Matolcsy. Photo by Noémi Bruzák/MTI