The decision about the six-month freeze from January was announced by the prime minister on Wednesday. The interest rates on retail mortgages will be frozen at their end-October levels, meaning that the monthly installment for February will already be lower than previous ones, Viktor Orbán said.

Domotor said that around half a million Hungarians have floating-rate mortgages. Without the measure, accelerated rate rises from October could have added 23 percent, or an average 11,000 forints, to borrowers’ monthly installments, he said in a video message posted on the government’s Facebook site.

Banking association does not support mortgage rate freeze

The Hungarian Banking Association on Thursday said it does not support a temporary government freeze of mortgage loan interest rates.

“The Banking Association cannot support the temporary interest rate freeze, to the detriment of the Hungarian banking sector, for clients who decided to take out riskier, floating-rate loans in spite of several warnings to the contrary,” the professional body said.

Prime Minister Viktor Orban announced on Wednesday that the government decided to freeze interest rates on mortgages, at end-October levels, until the end of June 2022.

The association said it had “learnt with surprise” about the measure on Wednesday.

It noted that Hungarian lenders, in cooperation with the National Bank of Hungary (NBH), have in recent years offered to switch clients’ floating-rate credit to fixed-rate loans, drawing attention to the benefits of fixed-rate loans in public forums and among their clients.

The association pointed to the banking sector’s “contribution to pandemic defence” in the form of paying a sectoral tax and participating in a repayment moratorium that extended for a longer period than any other one in Europe.