Hungary’s government has been widely criticised for its unorthodox economies policy, but its decisions on Swiss franc loans are being praised.
People like László Szilágyi who had to take a job in Britain to earn enough to repay his mortgage in francs.
He and others were saved when the government passed laws pushing the risk from currency and interest rate fluctuations back onto the banks.
But more than 1.5 billion euros worth of car loans were not covered. So Máté Gerhardt has seen his loan leap from the equivalent of 8,000 euros to 14,000.
He complains the risks were not explained to borrowers: “I’m thinking it would perhaps be worth my while to go to court, because there are so many court cases going on that are similar to my situation, where nobody told us about the possible consequences.”
Other countries are now looking at the actions of controversial Prime Minister Viktor Orban asking how they can fix the exchange rate for conversion of euro and Swiss-franc mortgages into their local currencies at below market levels.
But government spokesman Zoltán Kovács told euronews it is not that simple: “Some neighboring countries are interested, like Croatia, Romania and to an extent Poland, but you have to know that the Hungarian model didn’t just happen overnight, it was created in a long process, more than three years, when we were able to address this complex problem in a proper atmosphere and framework.”
Hungary was also lucky with timing completing its mortgage conversion programme before weeks the Swiss central bank scrapped its cap on the currency which sent the franc soaring.
Business journalist András Mihálovits said: “The Hungarian model could work but you’d need a lot of luck, I don’t think it could be copied in other countries with similar problems because the legal and the economic situation is very different in those countries. And I have to add that this was an excessively risky step which finally turned out to be a lucky one.”
And only for a lucky few as before the Hungarian government changed the rules many families and companies had gone bankrupt in recent years as they could not repay their foreign currency mortgages or loans.