May 12, 2014 / 3:42 PM / 4 years ago

Hungary to make FX loan foreclosure ban indefinite -lawmaker

BUDAPEST, May 12 (Reuters) - Hungarian lawmakers could make a foreclosure ban on foreign currency mortgages indefinite as soon as Monday, a senior ruling party lawmaker said, the latest step in protracted legal manoeuvring to get rid of the toxic loans.

Foreign currency loans, mainly in the safe-haven Swiss franc, were popular in the indebted central European country of 10 million people before the global crisis for the low interest rates they offered.

But the loans turned sour after a lending bubble burst and the forint tumbled, pushing up repayments and many into default.

“Parliament could decide as soon as today (in a fast-track procedure) to make the foreclosure moratorium on foreign currency mortgages indefinite,” ruling Fidesz party lawmaker Gergely Gulyas told a news conference.

“There will not be any foreclosures until parliament comes up with a definitive solution to the foreign currency loan problem,” he said.

Prime Minister Viktor Orban’s Fidesz party has promised a comprehensive relief package for foreign currency mortgage holders but the plans have been delayed for months due to the slow progress of various court proceedings.

Hungary is waiting for a Supreme Court ruling on some aspects of the mortgages, such as unilateral interest rate hikes and the so-called exchange rate spread applied in the loans.

Gulyas said these factors accounted for nearly half of the rise in repayments from pre-crisis levels but declined to give details about the planned relief package, pointing to the need for a relevant court ruling to be made.

The Hungarian court could make this decision later this year. Gulyas said once this happened, lawmakers could pass the new relief package “within weeks.”

Orban, re-elected for another four years in a landslide last month, has already passed a number of schemes to help hundreds of thousands of families saddled with such loans. One such scheme cost banks about a billion euros.

Hungarian banks are largely foreign-owned. They include units of Belgium’s KBC, Austria’s Raiffeisen Bank , Erste Bank and Italy’s UniCredit.

Gulyas said the step could also make the banks more keen to come up with a permanent fix for the problem. The Hungarian Banking Association could not comment immediately. (Reporting by Gergely Szakacs)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below