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‘Fair Banks’ And ‘Conversion’ Bills Approved By Parliament

2014.11.27.

The Hungarian Parliament passed the law on fair banks on Tuesday, together with the legislative amendment which will, as of the beginning of next year, automatically convert foreign currency or foreign currency-based consumer mortgage loan contracts into forints. Based on this, debtors may reckon with a HUF 256.47 exchange rate in the case of the Swiss franc, HUF 308.97 in the case of the euro, and HUF 2.163 in the case of the Japanese yen.

The law on fair banks ties unilateral interest, charge and fee increases to more stringent conditions, and regulates, inter alia, the provision of pre-contractual information. It covers the provisions relating to the amendment of credit contracts, the rules that govern the termination of credit contracts by consumers free of charge, the specific provisions that relate to foreign currency-based loans, and the rules that concern the changeover to the new contractual terms.

The loans converted into HUF will be tied to a reference interest rate, the three-month Budapest inter-bank interest rate (BUBOR); in other words, they will not be fixed interest-bearing loans. For the purposes of the conversion of their debts, debtors will have the option to choose between the average of the foreign exchange rates quoted by the central bank between 16 June and 7 November and the official foreign exchange rate quoted by the National Bank of Hungary on 7 November.

via kormany.hu photo: Gergely Botár (kormany.hu)