Hungary’s central bank (MNB) has called on Hungarian banks to introduce a moratorium on household loan repayments considering the “extraordinary situation” due to the coronavirus crisis, the bank said in a statement on Wednesday.
The MNB justified its decision by saying that the economic effects of the coronavirus will influence households negatively, temporarily affecting retail customers’ ability to borrow and repay loans. According to the central bank, loan payments should stop at least until the end of 2020.
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Should the banks fail to introduce the moratorium, MNB said it would ask the government to implement the measure by decree.
The National Bank of Hungary also instructed lenders to substantially reduce annual percentage rates on personal loans to a level no higher than five percentage points over the base rate (0.9%).
Banks are also expected to review their general lending practices, credit lines, and interest rates to improve their financial liquidity in households.
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The MNB also said it was considering restarting its mortgage note-buying program, which would provide more long-term liquidity for the banking system and reduce the financing costs of household loans.
The central bank also advised extending the deadlines of the family housing benefit scheme (‘csok’), and prenatal baby support loans.
The instructions come after the MNB had already called on domestic banks on Monday to temporarily suspend corporate debt payments, in order to mitigate the economic impact of the novel coronavirus.
Featured photo by Szilárd Koszticsák/MTI