The debt brake is on!

 For the first time in the housing market news, the MNB tightened the “debt brake”, which in effect means maximizing the amount of the installment relative to income. This measure will be introduced from October 1, 2018! What we do know is that this amount was 50% so far, and now it is reduced to 25% for loans with a minimum 3 year interest rate. For loans with an interest rate of 5 years or less, 35% will be available. The current regulation remains the only fix for 10 years.

There is no change for customers with incomes above $ 400,000

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In Hungary, this step prevents excessive borrowing, restores the favorable level of lending, and this is the right indicator due to the increase of interest rate risks.

The National Bank of Hungary (MNB) is currently promoting the spread of longer-term mortgages with several instruments!

  • the Qualified Consumer Friendly Home Loan (MFL) certification system,
  • mortgage financing adequacy ratio,
  • long – term interest rate swaps; and
  • mortgage bond purchase program. “

We found out from our independent expert! Curbing interest rate risks in households is a common goal, excessive borrowing, especially floating rate loans, means increasing the financial burden on families. It is very important and safe to spread fixed interest rates faster!

Here’s the decision, to quote in a few sentences:

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The Financial Stability Board of the MNB has decided to amend the rules on the income-proportionate repayment ratio (JTM). As of October 1, 2018, the new,

  • In the case of forint mortgages with an interest rate shorter than 5 years, the amount of the monthly installments of the debtor may not exceed 25% of the regular monthly net income, or 30% in the case of higher income.
  • In the case of new HUF mortgages with an interest period of more than 5 years but less than 10 years, the ratio may be 35%, but not more than 40% of the regular monthly net income.
  • For fixed-rate HUF mortgages for at least 10 years or until maturity, the current 50% and 60% JTM limits will not change due to interest rate risk.
  • Non-forint loans will also be subject to lower limits for shorter interest periods.

Taken together, the changes ensure that customers exposed to interest rate risk are also protected against easier changes to any unfavorable repayment schedule. In the opinion of the expert, this is the right direction against the possible release of repayment installments.

If you are interested in home loans, HDRTS, qualified consumer friendly loans, and changes in the way you use your home loans, contact our credit brokerage experts who will provide you with expert advice on free loans!


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