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Hungarian Banking Association Thinks Orbán’s Plans to Freeze Mortgage Rates is Unnecessary, Harmful to Banks

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When Viktor Orbán announced in a Facebook video that the government would be fixing retail mortgage rates at October levels, it was apparently news to the Banking Association.

“The Hungarian Banking Association was surprised to hear about the interest rate ‘stop’ that was announced yesterday,” the organization said in a statement.

The key role of the banking sector is predictably and sustainably financing the economy for the long term, the operation of which can be most effectively ensured by the market itself in a market economy. The Hungarian banking sector played an active role in the fight against the epidemic, during which payment services operated without disruption as new lending reached record highs. Thanks to this, the V-shaped economic recovery has ‘succeeded together.’ The Hungarian financial sector has contributed to the fight against the epidemic like no one else, by paying a special epidemic tax on credit institutions and by granting mortgage holders the longest moratorium in Europe.

-their statement began.

As for the freeze in interest rates, they recall that “in recent years, in cooperation with the central bank, the banking sector has every year offered to let its relevant customers convert to fixed-rate loans, and has explicitly made sure that new loans are multi-year fixed-rate products. It has repeatedly expressed the need for this to its customers and to the public.”

Due to this, the Banking Association cannot support the temporary freezing of interest rates to the detriment of the Hungarian banking sector for customers who, despite repeated warnings, opted for riskier, variable-rate loans.

-writes the Banking Association. According to them, “Customers continue to have the opportunity to fix their rates, providing them protection against higher interest rates in the long term. The interest rate ‘stop,’ only provides lower interest rates temporarily, until June 30, 2022!”

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