* Borrowers had option to repay forex loans at a big discount in 2011
* Suspicion is banks colluded to push up interest rates that time
* Lawyers representing banks have rejected allegations -newspaper
By Gergely Szakacs
BUDAPEST, Sept 27 (Reuters) - Hungary's competition watchdog GVH expects to end a probe by December into whether banks formed a cartel by pushing up the cost of forint mortgages in 2011 when borrowers had a temporary option to repay foreign currency loans at a big discount.
GVH launched the inquiry in November 2011 into whether major banks colluded when raising the cost of loans offered to households by 50 to 200 basis points largely at the same time after September 2011, when borrowers were allowed start repaying their forex mortgages in a lump sum.
"No decision has been made yet," GVH spokeswoman Katalin Gondolovics said on Friday. "The authority has until the start of December to make its decision."
The probe involves several banks, including Hungary's OTP , Austrian Erste and Raiffeisen, the Hungarian units of UniCredit and Intesa Sanpaolo and MKB Bank.
Late on Thursday GVH director Miklos Juhasz told local InfoRadio that in case banks appeal any decision, a final court ruling on the matter could be made sometime in 2015.
"On the basis of the information learned by the GVH, the likely reason behind the simultaneous increases by banks is an agreement among them," GVH said in a statement when it launched the probe in November 2011.
At a hearing on the case on Thursday, lawyers representing the banks involved denied they formed a common strategy, the daily Magyar Nemzet reported. It said some banks explained the rise in rates by higher funding costs.
Hundreds of thousands of borrowers took on debt pegged to the Swiss franc or euro before the 2008 financial crisis and then lost out when the exchange rate shifted.
Prime Minister Viktor Orban's government gave borrowers the option, known as the final repayment scheme, to repay foreign currency loans in a lump sum at artificially low exchange rates in a period of several months in late 2011 and early 2012.
Many people without enough savings tried to get rid of their foreign currency debt with new forint loans under the scheme, one of the most controversial measures by Orban's government that inflicted huge losses on commercial banks.
A spokesman for UniCredit in Hungary told Reuters in an emailed reply that the bank was convinced it had not committed any cartel-type activity in either this or any other case.
The other banks named could not immediately respond to questions seeking comment.
Prime Minister Orban has accused banks of duping clients with foreign currency loans. Banks in Hungary say the loan contracts were legal and they gave consumers full information.
Orban's government, which faces an election in the first half of 2014, gave banks until November to come up with a proposal to phase out remaining foreign currency mortgages, which lenders fear could push them into fresh losses. (Reporting by Gergely Szakacs; editing by David Evans)