freelogoOur objective is to provide English speaking readers interested in Hungary with a well balanced view of political activities in Hungary by featuring contents from various printed and online sources together with our own commentaries. We are convinced that Hungary is built on all sorts of different ideas, thoughts and opinions and, despite of the new Media Law, our aim is to provide an alternative and reliable source of information – contrary to the one-sided press of the government – for those who want to hear the voice of a free Hungary.

Hungary c.bank highly critical of government’s FX debtor relief package

Hungary’s central bank (NBH) has criticised the five-point relief plan for FX debtors the government and the Banking Association conceived. It said some elements of the scheme carry financial stability risks and could lead to further deterioration in banks’ lending activity. The NBH also suggests setting collateral repossession quotas much higher than what the cabinet wants. The measures to be introduced include:
•    fixing foreign exchange rate for repayments (CHF/HUF at 180, EUR/HUF at 250 and JPY/HUF at 200);
•    gradual reinstating of collateral repossessions;
•    setting up the National Asset Management Company;
•    re-launching EUR-based lending with certain limitations and
•    implementing an state interest subsidy scheme (also for a limited circle of debtors).

"A temporary fixing of exchanger rates creates the illusion and a false feeling of security in the debtors that they will free themselves from FX risks," the NBH said in a statement late on Tuesday. The stronger the fixed exchange rate is to the current spot rate, the slower the debts will decrease and the slower Hungary’s financial vulnerability will be remedied, the bank added. In its view, the difference between the fixed and the spot rate accrued on a special account is but an additional HUF-based lending. This "exchanger rate protection" programme may convince even good debtors to sign up for it even though they would not necessarily need it on social grounds, the central bank noted. It added that these debtors may face even larger repayments once the programme is over, unless the forint appreciates substantially. The NBH also warns that the smaller monthly burdens could lead to an increase of consumption financed from credit. There is a danger that some of the debtors will spend their windfall gains on consumption rather than to save up for after the scheme, and so they will not be prepared for monthly repayments potentially higher than what they currently have. This way even the presently good debtors risk becoming defaulting debtors, the NBH warned. Due to such risks the central bank suggests the government to make the fixing available only for the socially needy and those who struggle with difficulties of repayment. Lifting the foreclosure/eviction moratorium for good is "necessary and inevitable", the bank said, adding that the moratorium makes mortgage lending more difficult and more expensive and it undermines debtors’ willingness to repay their debt.  The NBH noted that it cannot formulate an opinion on the National Asset Management Company and the interest subsidy scheme, because it lacks the necessary specifics to do so.
While the bank welcomed the introduction of collateral repossession quotas after the moratorium is lifted, it is discontent with the quota itself, saying it should be set to a level that would "help revive lending via portfolio cleansing (at banks) without leading to excessive tensions on the housing market." The foreclosure moratorium is to be lifted as of 1 July but for the first quarter only properties above HUF 30 million in value will be subject where the loan taken out exceeds HUF 20 million. After that, i.e. in Q4 2011, the quota will be 2% on DPD+90 collateral worth less than HUF 30 m. The quota is to be raised to 3% in 2012, 4% in 2013 and 5% in 2014. The NBH finds the quotas set by the cabinet and the Banking Association too low, as these will not allow banks to clean up their portfolios and thus free enough funds to boost lending. It added that the introduction of such low quotas carries similar risks as keeping the moratorium in place would do. In order to avoid such risks the NBH suggests quotas between 5% and 10% and to review these every quarter.
www.portfolio.hu

Last Updated on Friday, 30 August 2013 09:11

Newsletter

Comments

Written on 13/09/2017, 20:13 by admin
guest-post-eu-and-orban-two-good-friendsThe decision of the European Court of Justice, according to which Hungary should accomodate more than one thousand refugees is at the same time appaling...
Written on 06/10/2016, 19:58 by admin
guest-post-the-day-after-the-referendumThe much anticipated referendum about the resettlement of migrants in Hungary was declared invalid, however, those who voted overwhelmingly rejected the...
Written on 23/06/2016, 06:31 by admin
disintegration-or-something-else-gyurcsany-s-solutions-to-the-ills-of-western-democracies  Something has gone wrong. Quietly, but ever more noticeably, more and more people in more and more places are in revolt. In the American...
Written on 06/04/2016, 19:20 by admin
how-germany-and-its-leftist-liberal-supporters-killed-solidaritySolidarity. This is the word that is probably is the most used and misused term in European politics. Its original meaning is supposed to mean to show...
Written on 23/03/2016, 20:30 by admin
the-orban-regime-can-only-end-in-failure  Change in the Orbán regime is only possible in the event of its downfall, so ruling Fidesz either becomes successful with its current set of...
Written on 23/03/2016, 20:20 by admin
anger-or-resignation  No matter how hard Mr Orbán is trying to get rid of his old cronies, he just cannot get rid of himself. He is too old for his system. The...
Written on 14/01/2016, 20:51 by admin
europe-s-new-yearThe European continent had a very difficult year in 2015, but that may be dwarfed by 2016. The most heated issue will be, without a doubt, the migration...
Written on 09/12/2015, 14:16 by admin
the-secret-diaries-of-viktor-orban-nov-dec-2015November 14th 2015I awoke to the shocking news about the Paris attacks last night. Words cannot express my feelings of shock.It turns out that one of the...
Written on 12/11/2015, 14:31 by admin
spies-in-the-newsroom   According to a new scheme, the government might place spies in the newsrooms, to have a better view of what is being written. This all...
Written on 29/10/2015, 20:02 by admin
greczy-s-blog-many-for-hungary  Some may want to do so, but DK will not write off its plans to win 2018 elections and to have a desperately needed co-operation with other...
Joomla templates by Joomlashine