NOTE: I made a hughe translational error. It is supposed to be a quarter of a million and NOT 4 million as my original translation said. The error has been corrected below! Mea Culpa!!!
A report by Hungarian Financial Supervisory Authority claims that a quarter million mortgage payers are in trouble. I have translated an article form a Hungarian news site on this topic.
Some things to consider:
- Hungary has a total population of 10 million people
- 2.5% of the total population is late paying their mortgages
- 1% of the total population is already 3 months behind in paying their mortgages
- 1% of the total population have already re-negotiated their mortgages
- A new law forbidding any forced evictions until April 2011
- Banks are being pressured to convert private loans taken in CHF to HUF, 15% below market value
- The article concludes by de facto villainizing the banks for making profits while Hungarians can’t pay their mortgages
A quater million mortgage owners in trouble
Many people won’t be able to pay their debts on time even after re-negotiating their mortgages and the upcoming school-start will make life difficult for a number of families.
A quarter million mortgages are in trouble according to the Hungarian Financial Supervisory Authority. This is the number of people who are late with their payments. Almost 100 000 of them are more than three months late with their mortgage payments. The financial institutions have already re-negotiated 130 000 mortgages but many will remain unable to pay on time even after the re-negotiations. The HFSA report warns about the significant weakening of the Hungarian Forint against the Swiss Franc in the second quarter which may lead to an increase in defaults.
The troubles of the debtors is somewhat lessened by the fact that the President has signed a law about legal enforcement whereby there will not be any forced evictions until April 15, 2010. Unfortunately the school-start will make things more difficult and even those who were able to pay on time this far may experience difficulties in August and September. A long term solution for them would be if they were able to convert their CHF debts to HUF using a favorable exchange rate.
According to our analysis, a conversion of the debts using a 170-180 CHF/HUF exchange rate would lead to a stabilization of the situation – says Mariann Lénárd, the head of the Victims of Bank Loans Union to Híradó [Hungarian News Chanel – transl. note].
Following the trends of previous years, the Hungarian banks are making significant profits – over ten billion HUF during the first quarter of this year. According to experts, these profits were not made on loans, but on government securities. The banks will be able to close the second quarter with profits as well although these profits are expected to be smaller since the weakening HUF exchange rate will increase their losses from loans.