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Information and registration for Tuesday’s online event:
1. Introduction of a general refund moratorium
This is the most important element and, at the same time, the best known of the loan decisions. At the proposal of the MNB, based on a government decree, debtors are not obliged to pay the principal, interest and commissions of the loans disbursed before 24:00 on Wednesday March 18, 2020 until December 31, December 2020. If someone still wants to pay, they must clearly inform the bank, either a statement or, in some cases, an active payment. During the moratorium, the principal debt does not decrease, and the payment of deferred interest must be made uniformly after the moratorium, without interest, until the end of the term, so that the contractual installment of the loan does not increase. This will mean an extension of the term for the vast majority of debtors remaining in the moratorium. The payment moratorium also applies to the obligation of natural persons participating in the National Asset Management Program to pay the price of the fee and rent. Whether the moratorium is worth staying is backed by calculations here, and we’ve written about the moratorium tricks here.
Would you take out a mortgage loan now? Use the Money Center calculator!
2. The appearance of a 5.9% APR ceiling and new consumer credits
Also based on the MNB’s proposal and the government’s decision, the total loan-to-value ratio (APR) of unsecured family loans may not be more than 5 percentage points higher since the end of 2020, which is 5.9% APR above of the current base rate. means for consumer credit. Banks responded to the measure by suspending sales of their old products and developing new products, so that in the second half of March most banks obtained a personal loan with an annual percentage rate of 5.9%. The risk to debtors of these products is that their APRs could be much higher starting in 2021. It was not until May 4 that the government made it clear that they would have to show both APRs for 2020 and beyond on these products. After personal loans, retail overdrafts, and credit cards corresponding to the 5.9% APR cap have also appeared at some banks in recent weeks, Money Center summed them up. It is also typical of these products that their interest rates jump from 2021, so they require special care from the debtor.
3. Decrease in the assumption of bank risks, tightening of credit conditions.
Not as a direct result of supervisory measures or legislative changes, but obviously banks’ risk appetite has also changed as a result of the crisis, to a very different degree and in different ways from one bank to another. Since mid-March, several banks have restricted access to retail credit, such as increasing the minimum income required to borrow, excluding certain income (such as per diem, dividends, foreign income, rent) or accepting a fixed-term job, or Acceptance of new intermittently financed new condo construction loans without project loans has just been suspended. OTP was the first to report such steps. Incidentally, credit conditions may also deteriorate for those with existing credit: a After the austerity measures taken by the Magyar Nemzeti Bank, short-term interbank interest rates in Hungary increased to a four-year high in April. As the interest rate on variable-rate loans with a balance sheet for May continues, the installation of hundreds of thousands of retail and corporate loan contracts could jump this month. For those who have benefited from the repayment moratorium, their deferred interest debt and, therefore, its maturity will also increase, and if the relative tension of the central bank remains permanent, the installment will also increase from January. In our article from last week, we figured out how much the repayment fee can generally increase and how long the term can be extended for those in the moratorium.
4. Accelerated Digitization in Retail Loans
In early April, MNB management issued a circular letter asking credit institutions to use state-subsidized loans, p. In the case of a pending baby loan, a subsidized loan for the construction and purchase of new apartments: official electronic certificates are accepted from government offices to prove the legal relationship of the clients. In the case of a virus, configure your online interface where customers can upload their electronically issued documents to avoid personal administration, simplification, and avoid concerns about the authenticity of certificates. In accordance with past practice, most credit institutions accepted certificates for this purpose only from clients’ personal administration, not electronically. This was true despite the fact that, p. The 2019 Government Waiting Infant Subsidy Decree explicitly states that related applications may also be submitted electronically. The MNB also called on banks to provide their clients with an administration without personal appearance, and in our experience, banks are gradually but increasingly trying to meet central bank expectations.
5. Different treatment of overdrafts and credit cards.
The treatment of overdrafts and credit cards is a source of uncertainty regarding the application of the refund moratorium (see point 1), since the term and maturity are not or only difficult to interpret. According to information provided by Magyar Nemzeti Bank in early April, it became clear that the moratorium on these loans should be interpreted as the part of the line of credit withdrawn before midnight on Wednesday, March 18, that customers are not required to pay before the end of 2020. In the MNB’s opinion, the period within which the client must pay its unpaid debt should be based on a mutual agreement between the client and the creditor. Since credit cards and overdrafts generally involve small amounts of credit, it is acceptable that this period be, for example, the 12 months proposed by the banking sector. In our experience, banks generally seek to comply with this proposal for the small number of credit card and overdraft customers affected by the moratorium.
6. Change in waiting baby loan
The guarantee fee to be paid on the basis of a loan disbursed under the Government Decree on the Baby Waiting Allowance will not apply during the payment default; Read the Government Decree of March 24, in which the government also established detailed rules for the moratorium. The provision has created uncertainty in the banking sector as three interpretations are possible: 1. it applies to everyone in general, regardless of whether the contract was entered into before or after March 18, 2. it only applies to transactions already liquidated before March 18, but to all of them; Regardless of whether customers opt for the moratorium or opt for continuous payment, 3. it only covers transactions that have already been disbursed before March 18, but also only for those who really benefit from the moratorium. We know that the banks turned to the Ministry of Finance and the MNB for an interpretation, but have not yet received a response, meanwhile, they generally also charge a guarantee fee for non-moratorium and new borrowers, who do not have to pay in the end. They installed).
7. Changes in valuation and self-sufficiency.
On March 19, the MNB announced that it would temporarily grant an exemption from the preparation of valuations and notarial deeds regarding ongoing retail mortgage loan transactions, which would have to be replaced after disbursement. In mid-April, the central bank also amended its management circular on expectations regarding the valuation of own funds for retail mortgages by financial institutions. A significant relief here is, among other things, the fact that credit institutions have to carry out a much narrower range of ex ante controls on the source of own funds than before. Furthermore, the central bank continues to consider it a particularly risky practice if the borrower’s provided own funds are available in the form of a personal loan disbursed by a financial institution, even in cases where the borrower’s income situation at the time of the loan it allows for greater indebtedness. According to the MNB, up to 75% of the waiting baby loan can still be used as equity.
8. Changes in notaries
In addition to the relaxation of the central bank mentioned in the previous point, the participation of notaries in mortgage loans has not ceased, since certain notarial procedures can be used during precautionary measures in addition to precautionary measures. Notary offices generally receive clients by pre-registration to change congestion times and to avoid congestion. They attach great importance to matters that are truly urgent; This also applies to matters that are financed, that is, bank transactions. Thus, for example, it is still possible to have a notarized deed, a certified copy, a copy of a signature title, or a health statement regarding a home or other loan. With respect to the redemption moratorium, it is worth mentioning that if the contract covered by the payment moratorium was notarized, there is no notary fee charged for notarizing the contract amendment, as government decrees stipulate that amendments to the previous notarial deed overwrites.
9. Preparing for 2021
In mid-April, MNB management issued a circular letter asking national loan and payment institutions to prepare for the period after the end of the repayment moratorium by strengthening their business and monitoring processes. They also need to develop financing schemes and payment offers that allow them to remedy any payment difficulties of their debtors. According to the MNB, it is not acceptable for a customer to be automatically demoted for using the trade moratorium. Debtors must also be informed monthly of the amount of the principal, interest, and fees paid in connection with their loan during the moratorium. Upon expiration of the moratorium, lenders must schedule payment of interest and unpaid fees in consultation with debtors. The central bank expects credit institutions not to increase their fees and commissions during the moratorium on their bank account packages and loans, the amount of which depends on the number of monthly transfers to the client’s bank account. Another requirement is that credit institutions develop payment facilitation schemes for clients who need it and report it clearly and personally. Demonstrate cooperative behavior in handling informed customer requests to modify contracts.
Would you take out a mortgage loan now? Use the Money Center calculator!
10. Changes in credit intermediaries.
Due to the epidemic situation, the MNB issued a management circular letter to financial intermediaries, who had been selling mainly by personal communication, in early April, to continue serving their clients by phone and electronic means. Money market intermediaries should inform consumers about government credit facilities, and insurance intermediaries should help insurers market products that can protect clients in the event of financial difficulties. The central bank expects money market intermediaries to be professionally prepared to inform the possibly increasing number of clients who turn to them about current government measures to assist borrowers (eg, repayment moratorium, maximization of total debt ratio).
Incidentally, the effect of the coronavirus is barely visible in bank statistics released in March this week: Home loans and baby loans also showed a sharp rise in the first (true, truncated) month of the epidemic , and bank deposits produced the fourth strongest month (!) in a year. . Corporate loans also rose very well, and only consumer loans hit by the 5.9% APR ceiling (understandably) showed a decline in the credit market. However, there is also an explanation for the positive transients, and the statistics that are really interesting in terms of the effects of the coronavirus crisis will only come in the coming months. We write about all this in detail here.
Cover image: Getty Images
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