The National Bank of Hungary (MNB) calculates that there will be customers whose debt – in the case of performing Swiss franc-denominated mortgages – will be reduced by only 0-5 per cent, but also those whose debt will be more than 30 per cent.
Foreign currency-denominated debt and loan repayments
According to data released by the MNB in a press conference on Tuesday, an average CHF foreign currency-denominated debt and loan repayments will decrease by 20 percent, but there may be large differences in the average, depending on the amount of the loan, the duration of unfair terms and the bank.
Based on contract numbers, debt reduction brings 0.6 percent of clients to a 0-5 percent debt reduction, 2.3 percent to 5-10 percent, 19.4 percent to 10-15 percent, 24.8 percent to 15-20 percent, and 12.9 percent 20-25 percent, 26.9 percent, 25-30 percent, and 13.1 percent more than 30 percent debt reduction.
The role of the exchange rate margin in settlement
Is much smaller than that of unilateral interest rate increases. The unfair exchange rate average was 1.25 per cent before the crisis and 1.7 per cent after the crisis, while unfair interest rate rises averaged 2 percentage points after the crisis.
Based on an average loan, the MNB calculated how credit data change after settlement or forint conversion.
In the example, a loan of CHF 37,000 (approximately US $ 5.7 million) was taken in mid-2007 for a maturity of 20 years, ending on May 31, 2027, with an initial interest rate of 5.71 percent at six months, and there was no late payment.
The initial monthly installment of the loan
The example was CHF 258.93, or HUF 39,678. The installment for November 2014 amounted to CHF 302.22, or HUF 78,390, which, after settlement, will be CHF 208.29 per month, HUF 53,000. The “fair” interest after settlement is 5.71 percent (the lower of the initial interest rate and the interest rate applied to the consumer contract on July 19, 2014).
Following the HUF conversion, the principal debt of the originally HUF 5.6 million loan is HUF 5,715,750, the projected “fair” interest rate is 5.25%, the interest period is 4 years and the expected repayment installment is HUF 52,101 according to the MNB.