Hungarian banks have told the country's radical rightwing government that it cannot afford to freeze mortgage interest rates to clients until next year's general election at a time when the
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It noted that Hungarian lenders, in cooperation with
The association pointed to the banking sector's "contribution to pandemic defence" in the form of paying a sectoral tax and participating in a repayment moratorium that extended for a longer period than any other one in
The MNB began a tightening cycle in June, raising the base rate from a record low 0.6% to 2.4%. Since November, the one-week deposit, at 4%, became the main tool for setting monetary policy. MNB governor
Prime Minister
Around half a million Hungarians have floating-rate mortgages. Without the measure, accelerated rate rises from October could have added 23%, or an average HUF 11,000, to borrowers' monthly instalments.
The share of variable-rate mortgage loans have been declining over the years.
More than half of debtors could face a 7% increase in their monthly instalments if the base rate rises 200bp.
The government has instructed banks that they must tell their customers in plain language that the government is to thank for freezing mortgage rates and exactly how much they stand to gain from the measure, local media reported on
The mortgage cap is part of long list of populist measures before the 2022 elections. The government extended the loan foreclosure moratorium until mid-2022 and froze fuel prices in mid-November for three months with an option to extend it further.
The Orban cabinet faced with a unified opposition has unleashed an unprecedented spending binge before the elections. Families are set to receive HUF600bn in tax rebate in February and the elderly will get an extra month of pensions worth HUF200bn.
The 19% rise in minimum wage and the tax exemption for under-25s came into effect from January. The six months extra wage for armed personnel will cost the budget HUF175bn.
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