Hungary May Offer 2% Rate Subsidy for Public Workers, Index Says

The Hungarian government may offer a 2 percent interest-rate subsidy on forint loans to public workers who want to repay their foreign-currency mortgages in a lump sum, Index said, citing a government document it obtained.

The subsidy would remain in place for five years and would cost the budget 28 billion forint ($114 million) in that time, the website reported today. The amount of the subsidized loan would depend on the number of children a borrower is raising, it said.

About 53,000 public workers indicated their intention to repay 185 billion forint in mortgages at below market rates, causing bank losses of 55 billion forint, Index said, adding that the government would assume one-third of lenders’ losses under an agreement signed last year.

The government estimates that some 144,000 public workers have foreign-currency mortgages valued at 800 billion forint and the final number of those wishing to take part in the early repayment plan may be higher than 53,000, according to Index.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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