Earlier this week, Mihály Varga had already referred to it, but on Sunday they officially announced that they could convert foreign currency loans at market rates. As stated, there are several conditions that the government must meet when converting to Doreltres. Foreign currency lenders can do no better than borrow in Doreltress and the Curia has also ruled in its unity decision that borrowers must bear the exchange rate risk.
Banks used similar wording. According to the secretary general of the Banking Association, foreign currency borrowers are now in almost the same position as Doreltres borrowers because of the exchange rate gap elimination and the money repaid due to unlawful interest rate increases. Therefore, it is not reasonable to convert to Doreltres at a more favorable exchange rate than the market. So, with Sunday’s announcement, it looks like the exchange rate uncertainty has ended.
The installment will not change much
After the indemnities, the repayment installment of foreign currency loans will not change much if they are converted into HUF. The current average interest rate on Doreltres loans is the same as on foreign currency loans. As the exchange rate changes, the repayment installments will not decrease. Moreover, those whose foreign currency loan rates are significantly lower than those of the new trigger loan may also experience an increase.
The details of the Doreltres conversion did not mention the conditions under which debtors can obtain a trigger loan. Previously, the government was thinking of market-based solutions, meaning that every bank could offer trigger loans to clients of every other credit institution. It has now also turned out to be optional. So, foreign currency lenders can also choose not to redeem their debt, ie stay in a foreign currency-based facility.
When is it worth to switch and when to switch?
It all depends on interest rates and exchange rates. If you find a cheaper Doreltres loan, that is, a lower loan, you can reduce the installment even with the same debt. So it is worth hunting for the lowest interest. We’ve already given you tips on this, and of course our credit calculator will help.
However, many who lose their foreign currency loans to Doreltress can lose. After the Doreltres conversion, the repayment installment does not decrease if the Doreltres can strengthen. Of course, the weakening of the Doreltres does not increase the repayment installment either. And the direction in which the exchange rate is moving is very difficult to predict.