Redemption moratorium: we calculate how much you would fall or gain with overtime

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This is how the extension of the moratorium works

Zsolt Semjén presented a bill that partially extends the amortization moratorium, on the basis of which the

• the unemployed, those who expect and raise children, retirees, public employees and companies in financial difficulties (to be defined in the regulation) can remain in the moratorium from January 1 to June 30, 2021, creditors must consult electronically with retail debtors, companies must request a separate extension,
• The banks will not yet charge interest that accrues interest, but the debt for interest accrued under the moratorium must be repaid in such a way that it does not increase the contractual fee but rather extends the term
• the extension of the moratorium also applies only to loans already existing on March 18, 2020, the installment may not actually increase due to the moratorium, but other effects (for example, increase in the benchmark interest rate) may have the same effect as in the absence of the moratorium,
• Those who are entitled to it can enter and exit the moratorium at any time, and those who are not eligible will not be able to terminate their credit agreement by creditors until mid-2021.

More details:

Let’s look at three examples!

As stated above, it is not a question for debtors how much their installment will increase, as it will not do so due to the moratorium. The question is how much maturity will increase, since it will spread in two ways at the same time:

• On the one hand, with the duration of the moratorium, which is almost 9.5 months in 2020 (since the moratorium began on March 19, 2020) and 6 months in 2021: a total of 15.5 months,
• on the other hand, since the debt for interest not paid during this period (without interest) has to be amortized in a uniform way over the rest of the variable maturity so that it “fits” in the contractual installment of the loan,

In other words, maturities are normally extended by several months than would be justified by the mere fact of the moratorium. We looked at three examples of maturity extensions and found that:

• with a typical interest rate of 5% and an outstanding debt of 7 million, with a remaining maturity of 10 years (that is, 120 months) in March of last year mortgage loan the reimbursement moratorium is 14 months, with an extension next year 23 months Extend the term,
• with a typical interest rate of 13% and an outstanding debt of 1 million, with a remaining maturity of 2 years (that is, 24 months) in March of last year personal loan the repayment moratorium is 11.5 months, along with an extension next year 18 months Extend the term,
• with an interest rate of 3% and an outstanding debt of 50 million, with a residual maturity of 3 years (that is, 12 quarters) in March of last year SME investment loan the repayment moratorium extends maturity by 3.3 quarters and, together with its extension next year, by 5.5 quarters.

The moratorium does not increase the fee, but the extension of the term (longer than the moratorium) also increases the total amount to be repaid.

In the case of the 7 million mortgage loan in the example, we obtained an increase of 549 thousand, in the case of a personal loan of 1 million 139 thousand, and in the case of a SME investment loan of 50 million 1.7 million in the amount to be returned plus the maturity as a dependent variable.

However, at present value, in economic terms, it may be convenient for all beneficiaries to remain in the moratorium, since banks cannot charge interest on the deferred repayment, it will be charged later, without “late” or “penalty interest. “. The present value of the loan affected by the moratorium is more favorable to the debtor than the same loan not covered by the moratorium, since the subsequent money is worth less than the current one (think only of the return of MÁP + as a risk-free investment) .

In short, therefore The expected extension of the term of typical loans will be a few months longer than the duration of the moratorium, which can exceed a year and a half due to the moratorium from March 2020 to July 2021. However, there is a large variation between different loans and, in economic terms (at present value), it is worth choosing a moratorium due to the omission of compound interest.

How many can participate in the extension?

According to a previous announcement by the MNB published in the Portfolio, 31% of retail loans and 26% per portfolio eligible for the moratorium can benefit from the extension of the moratorium, in the case of companies this ratio is 16% per number and 13% per portfolio. -sixteen%.