Hungary proposes temporary fix for FX mortage payments
BUDAPEST (Reuters) - Hungary's ruling Fidesz party on Monday proposed expanding a scheme that supports foreign currency mortgage holders to everyone who holds such a loan, according to a bill submitted to parliament.
The government, which supports the proposal, has said this would offer a temporary fix until it tables its own permanent solution once current lawsuits against banks give a clearer picture of what can be done to manage the debts.
The loans, sought after until 2008 for their low interest rates, became costly when Hungary's forint currency weakened in the global crisis.
"These measures are perfectly suitable while an unambiguous legal environment is developing," government spokesman Andras Giro-Szasz told a news conference. "Once the legal environment is known the government will be able to make its own measures and proposals."
The bill could raise the costs of banks in Hungary, which already levies some of the highest banking taxes in Europe, but would probably be much less costly than other potential measures, such as a gradual conversion of the loans into forints at a preferred exchange rate.
Earlier government schemes gave only partial help with the loans, denominated mainly in Swiss francs and euros.
The government, which faces elections in April or May, earlier gave banks a November 1 deadline to amend loan contracts in favour of foreign currency borrowers, or face government measures to resolve the matter once and for all.
The new bill, published on parliament's web site, would expand the existing exchange rate cap scheme to borrowers who are more than 90 days behind on their payments or owe more than 20 million forints ($90,700), groups that have so far been excluded.
The scheme caps the repayments at exchange rates far below market levels, with some of the difference paid by banks and some by the government. The borrowers have to repay their share of the difference after a long grace period.
A government source with knowledge of the matter told Reuters that Fidesz parliament group leader Antal Rogan and Economy Minister Mihaly Varga held a meeting about the proposal earlier on Monday and the proposal had the minister's backing.
Zsolt Kondrat, an analyst at MKB Bank, said the bill was unlikely to hurt banks' bottom line significantly.
"The government has said many things, talked about conversion, no government participation, but this is a far cry from all that," he said. "If they were frank then this is a facelift not the long-promised solution."
The proposal could become law as early as Tuesday, Fidesz parliament group leader Antal Rogan told a press conference, according to national news agency MTI. A Banking Association spokeswoman did not immediately comment on the bill.
(Reporting by Sandor Peto/Marton Dunai/Gergely Szakacs; Editing by John Stonestreet/Ruth Pitchford)
