At the beginning of April, a foreign exchange debt relief program was launched, which could bring many years of relief for almost everyone. Still, banks are hardly interested because the timetable invented by the government and the banks is limping. Who can go now, it is better to wait a little more for someone who is in urgent need not be able to apply.
New exchange rate fixing system
Starting in April, the new exchange rate fixing system, which means that households with foreign currency loans can repay their loans at a fixed rate 20-40 percent lower than the current market rate, for several years. They will have to repay the amount accrued as a result of the exchange rate from January 2017 at a discount rate.
By law, from April to July, only public servants are eligible to apply for exchange rate fixation, non-government mortgage lenders are eligible for the second half of the year, and freelance mortgages are only available from September. This schedule was negotiated by banks to avoid major congestion, but according to the first few weeks of experience, it is more of a hindrance than a help to foreign currency borrowers. Foreign currency borrowers seem to be left in the cold, partly because they are not aware that they can claim it, even though it is almost a mistake to take advantage of it.
The rules were set up in such a way that the system was complicated by far-right counter-interests. The civil servants, who could already run for the exchange rate fixing, were partly interested in delaying their application until the end of the period for which they were appointed. This is true for public employees who, following a special letter from Viktor Orbán in December last year, tried to get out of foreign currency loans by fixed-rate early repayments until the end of last year, because the cabinet did not provide the promised preferential credit. They are the majority of the 70,000 or so foreign currency-educated public servants: in mid-January, about 40,000 people complained that although they wished to make use of the early repayment, they could not and felt overwhelmed. It was in their wake that the cabinet finally decided on extra benefits, which, in part, justify the slowness of the civil servants.
One-off non-repayable state subsidy
The government adopted the legislation so that this circle also receives a one-off non-repayable state subsidy: the difference between current and preferential monthly repayments is paid for the period from February to July. So the money you get in the gift depends on who enters the exchange rate fix – the later, the more you receive as a one-off benefit. This could cost you a few tens of thousands of forints, which is probably worth a bit of laziness and then start doing business in May and June.
In contrast, field currency debtors, who are not yet available to bank clerks, would be in their best interest. The steady exchange rate of the euro close to 300 forints and the nearly 250 forint franc puts a 20-40 percent higher burden on them than the fixed exchange rate, which in some cases would be a significant relief. Especially if they are able to take advantage of the investment potential of the program and save the money they are saving on favorable terms, for example through a home savings contract, for a rebound from 2017 onwards.
The law is permissible
The law does not set the agenda, it does not prohibit the bank from serving anyone other than public servants if its time permits. It merely states that ‘the financial institution shall make every effort to ensure that the credit agreement is concluded within 60 days of receipt of the complete application by the borrower’.
The banks sought by – reported equally low levels of public interest. Up to a few hundred people in each bank applied for the scheme in the first three weeks, bringing the total to a few thousand people. The Good Finance Banking Association was not surprised that there was no seizure so far, although it had previously been expected to have a participation of at least 50 percent.