Factsheet for case HU-2020-12/650 – Updated – measures in Hungary
|Country||Hungary , applies nationwide|
|Time period||Temporary, 18 March 2020 – 31 December 2020|
|Type||Legislations or other statutory regulations|
Measures to prevent social hardship
– Preventing over-indebtedness
|Author||Nóra Krokovay (KOPINT-Tárki) and Eurofound|
|Case created||15 April 2020 (updated 14 December 2020)|
|Related ERM support instrument|
Under Section 1 of the 47/2020 (18 March) government decree and 62/2020 on detailed rules concerning the payment moratorium, the reason for the measure is to alleviate the adverse effects of the coronavirus pandemic during the period Hungary is in a ‘state of emergency’ announced by the government on 11 March. The goal is to protect people who lose their income because of the pandemic and cannot make debt repayments. Another goal is to keep lending activities afloat despite the crisis.
Every commercial loan, mortgage or other loan contract signed before 2020 March 18 will receive a freeze on loan repayments, capital repayment and any related fees until at least 31 December 2020 (can be extended). The length of the loan will be extended by the period of the freeze. The Banking Association said the deferred loan payments would amount to about HUF 450 billion in the 9-month period, but our estimations based on partner interviews suggest it would be at most half of that amount. Clients must sign a statement (online) to opt out of the payment freeze scheme, so the default is that they do get the suspension.
Hundreds of thousands of people or about 30-50% of credit clients have indicated to their banks until April that they would not avail of the payment freeze option and continue to make payments as before. The prediction of the National Bank of Hungary on the uptake was about 30% of all individual clients at the time. In its inflation report of June 2020, the National Bank of Hungary said that the loan suspension for individuals managed to serve its purpose of replacing lost income so that consumption could stay level or flatten out. Out of a total of about HUF 1,100 billion (€3.274 million) in household loan repayments eligible for the deferral, HUF 600 billion worth of repayments were requested for deferral under the scheme. The bank estimates that 50-70% of the amount freed in this way was spent towards consumption by households (private individuals).
|Does not apply to workers||Does not apply to businesses||Applies to all citizens|
Company / Companies
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Not applicable||Not applicable|
Social partners' role in the implementation, monitoring and assessment phase:
The Banking Association was consulted about the measure prior to announcement.
Eurofound (2020), Suspension on loan payments for private individuals, case HU-2020-12/650 (measures in Hungary), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch
Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.