Hungary: More forex debt relief in pipeline

Banks were trembling this week as the government prepared to announce another strategy to help households saddled with foreign-currency mortgages – whose repayments rocketed when the economic crisis hit in 2008. Hungarian Economy Minister Mihály Varga announced on July 31 2013 that foreign-currency credit should be removed from Hungary’s lending market.

However, fears – stoked recently by comments by Deputy Prime Minister Tibor Navracsics – that banks would be forced to take a significant haircut on their forex mortgage portfolios were assuaged somewhat by Varga’s further remarks. He added a proviso that any scheme introduced should not give forex borrowers a better deal than those who took out mortgages in the forint – effectively ruling out a forced return to the pre-2008 exchange rate.

Forex mortgage debt entails “economic and social risks with which the country cannot live in the long run”, Varga told state news agency MTI.

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(Photo: Krisztián Hoffer/