Parliament votes to convert FX consumer loans to forint-based ones

November 25, 2014


Hungary’s parliament passed a law today which, if signed into law, will require that all FX consumer loans be converted to forint-based loans.  Thereafter, banks may charge interest of 3-month BUBOR (Budapest Interbank Offered Rate) plus up to 4.5 percent in the case of home mortgage loans and up to 6.5 percent in the case of other consumer loans.

The law provides for debtors to choose between the Hungarian Central Bank (MNB) exchange rate as of November 7 (€1 = HUF 308.97, CHF1 = HUF 256.57) or the average MNB median exchange rate between June 16 and November 7.

The mandatory conversion applies not only to principle but also interest and all fees and costs related to the loan.

Debtors meeting one of four criteria may request that their FX loans not be converted to forints, including

  1. Those whose contracts expire by the end of 2020
  2. Those for whom the new forint-based interest rate would exceed the original interest rate
  3. Those who have income in the currency of the loan
  4. Those whose debt service as a percentage of income falls within a certain limit.

According to the sponsor of the bill, Justice Minister László Trócsányi, the reason the interest was set near to the market exchange rates is “due to the risk that the Hungarian state would lose a lawsuit if challenged in international forums” in light of Constitutional Court and Curia decisions “binding” on the government.

National Economy Minister Mihály Varga said the law would free some 400,000 FX loan holders from the risk of fluctuating exchange rates.

According to, the forint has lost 15 percent of its value against the euro and 35 percent of its value against the Swiss franc since Fidesz came to power in April 2010.