On 21 June 2013, the Commission warned Hungary via an official letter of notice that it has launched an infringement procedure against Hungary over restrictions on mortgage regulations on which foreign currency loans are based.

The high share of mortgages within the stock of Hungarian household loans, within that the extremely high share of foreign currency debt and the ever-increasing number of bankrupt debtors ensuing thereof had been one of the grimmest legacies of Socialist governments.

Therefore, in summer 2010, it was one of the first decisions of the National Assembly to ban foreign currency mortgages. This step was necessary for putting an end to the accumulation of further debts by households that was carrying the risk of losing their homes. However, in accordance with EU legal guidelines, the Government must not fully eliminate the option of foreign currency mortgages, and thus the Government has restored this type of loan.

The Commission also acknowledges that foreign currency mortgages provided for private persons carry high risks, but they argue that there are some less restrictive, alternative options which might replace the disputed measure. In spite of that, the Government upholds its legal view that foreign currency loans are risky products which do require certain prudential and consumer protection restrictions.

Consequently, the Government believes that in light of the inherent risks carried by foreign currency loans no change is justified in this issue, and the Government has been and continues to be ready and willing to engage in meaningful disputes over the implemented measure.

Source: Ministry for National Economy