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Implications of mortgage relief plan currency of Hungary
Hungary's shaky banks are about to again bear the burden of assisting local mortgage holders under pressure against the rising costs of debt repayment on loans denominated in foreign currencies. According to a law passed on July 4, lenders will be required to compensate borrowers for unfair fees and increases in interest rates applied to loans in the last decade. In addition, the government wants banks to become about 15,000 million in mortgages denominated in forint currency before the end of the year. The measures are aimed at reducing external vulnerabilities of Hungary but instead further delay a recovery in credit and facilitate the departure of foreign banks in the economy. Ultimately, they could force the government to bail out troubled banks.
By Jelena Vukotic.
Source: RGE / Nouriel Roubini
