Foreign currency loan – Forint eliminates exchange rate barrier
Settlement and forint conversion also apply to foreign currency debtors entering the exchange rate barrier system. Exchange rate hoarders should consider whether to keep the installment down, risking that their monthly repayment may increase after the overdraft facility expires, or rather accept a higher installment.
When settling with foreign exchange gatekeepers
Banks first have to settle overdue debts related to their transactions, and then pay off the overdraft balances, and, if there is any overpayment, they settle it as an early repayment of the original foreign currency loan. The discount given by the bank is deducted from the overpayment during the settlement process, but the discount from the state can be retained by the clients.
Those who have completely run out of credit but have overpayments will be paid the remaining amount.
After settlement, only those accounts that have outstanding accounts outstanding after the settlement remain. The amount of the savings accounts may only increase by the amount of interest charged on the savings account loan after the conversion into HUF, and the repayment difference shall be added to the loan debt.
The repayment difference may continue to arise because, in the case of contracts affected by both the exchange rate barrier and the forint, the installments due from February 2015 may not exceed January 2015. This limit shall apply for a period of 60 months from the date of application of the exchange rate barrier. However, any increase in installments due to changes in interest rates is an exception.
In the case of contracts affected by a currency swap
the remaining maturity shall be set so that the installments due after the 60th month from the date of application of the currency swap shall not exceed 115% of the installment payable during the 60th month, ie up to 15%. To this end, the term may be extended up to the age of 75 of the debtor – or his debtor if he is younger.
Currency hedge clients may initiate a higher installment payment at any time within 60 months of the date of the currency exchange hedge. This is worth considering because they can help you avoid a later, more significant surge in repayment or an extension of the term.
Under the exchange rate swap
the Swiss franc could be repaid at 180 forints, the euro at 250 and the Japanese yen at 2.5, and the fixed rate could be used for up to five years or until the foreign currency loan expired. The amount resulting from the difference between the fixed exchange rate and the current exchange rate has been accumulated in a pool account.
The bank and the state took over the fixed interest rate over the fixed exchange rate, and the client would only have to repay the principal at a later date. The interest on the forint-based loan accrued in the pool account shall not exceed the three-month interbank interest rate during the period for fixing the exchange rate.
The number of active collective accounts opened in October 2014 reached 172,875 according to the latest data provided by the National Bank of Hungary (MNB). At the end of October 2014, the outstanding foreign currency loans at fixed exchange rate were HUF 1476,62 billion. At the end of October last year, overdrafts totaled HUF 27,978 billion. Foreign currency-denominated counterparties participating in the foreign exchange barrier facility were exempt from paying interest on the fixed rate of HUF 49.758 billion at the end of October.