For-ex payback law passed by Parliament

Hungarian parliament on Monday evening gave the green light to the ruling Fidesz party's scheme to offer holders of foreign currency-denominated mortgages the option to pay off their full loans at preferential rates.

The bill, submitted by Fidesz member of parliament (MP) Antal Rogán, was passed into law with 277 votes for, 9 against, while 30 deputies abstained from voting. The motion was supported by the MPs of Fidesz and of the radical nationalist Jobbik Party. The green opposition LMP voted against while the Socialists abstained.

Under the new law, troubled borrowers can make a full repayment at 180 forints to the Swiss franc, 250 forints to the euro and 2 forints to the Japanese yen, unless the rate of the forint was not higher at the time of taking out the loan. The law also gives borrowers the deadline of December 30 this year to indicate their participation in the program. Those indicating to take this option will have 60 days to do so.

Since the payback option - that favors those who have the full sum available or who can get that sum from a new HUF-based loan - is set at rates well below the market level, the European Union has expressed its concern. As an indication that the government is well aware of the risk that the EU would annul this legislation, prime minister Viktor Orbán already indicated they have a 'Plan B' in the drawer.