Foreign currency loans – Laws comply with constitutional and EU requirements

Laws and bills aimed at settling the situation of foreign currency borrowers will stand the test of constitutionality, meet EU standards and help foreign currency borrowers as promised by the government, Minister László Trócsányi stressed at a press conference in Budapest on Friday.

He added that since the legislator intervened in private contracts

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This could only be done very carefully, taking into account the principles of necessity and proportionality. He also noted that customers are left with a wide range of options: those who receive payments in foreign currency, meet the strict conditions of the National Bank of Hungary, or expire by the end of December 2020 or are denominated in Yen or VIP, and they do not use forint conversion.

“The government is keeping its promises, installments will be reduced by 25-30 percent,” László Trócsányi said.

The minister said about the bill on forint conversion

The minister said about the bill on forint conversion

It had to take into account what the initial interest rate premium was when taking out a foreign currency loan and basically assumed that the original interest rate premium would be restored. At the same time, a minimum interest rate premium of one per cent and a maximum have been set: 4.5 per cent for home loans and 6.5 per cent for free loans. In the government’s view, this will also improve the position of foreign currency debtors – stressed László Trócsányi.
Mihály Varga, Minister of National Economy said at the press conference that the government will continue to adhere to the principle that about 650,000 mortgage-based Forint-borrowers should not be worse off than foreign-currency borrowers. The government agreed to base the settlement on the average rate for the period from June 16 to November 7, the date of the unity decision of the Curia.

The Curia’s unity ruling also stated that the exchange rate risk had to be borne by the clients, which limited the government’s room for maneuver, added Mihály Varga.
The Minister of National Economy explained that the calculations of the average exchange rate had been carried out, which was included in the agreement with the Hungarian Banking Association. The daily exchange rate of November 7 was also included in the exchange rate because in recent months the exchange rate between the Swiss franc and the euro has changed and the Swiss franc and the euro have either strengthened or weakened, so they would have done worse than the average. they are euro-authentic, ”said Mihály Varga.

He stressed that the government expects

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That the majority of the over 400,000 mortgage-based foreign currency denominators will opt for forint conversion, thus eliminating the risk of floating exchange rates.
On the question of what justifies staying with foreign currency loans for those whose contracts expire by the end of 2020, László Trócsányi said: based on the principles of proportionality and necessity, they thought they would give the option to the otherwise few; this is also a constitutional decision.

The minister also said that the minimum rate premium has been lowered from 2% in the original proposal because interest rates have been falling steadily over the past 3 years.

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