Domestic retail debtors of CHF mortgages remain unaffected by the SNB's move of yesterday

HUNGARY - In Brief 16 Jan 2015 by Istvan Racz

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In our Quarterly Report, out early this week, we expected a weaker forint for 2015, but we did not think it would come about as quickly as it did. In the wake of the Swiss National Bank's decision yesterday, EURHUF has strengthened by 1%, to 323, and CHFHUF has jumped by no less than 52 units, to 318. But crucially, the CHFHUF move did not affect the debtors of the CHF 10.35bn remaining CHF-denominated mortgage debt, raised from domestic banks prior to 2010 (when such lending was prohibited). As is known, these debts will be converted into HUF at some point in 2015, and the conversion exchange rate was fixed at CHFHUF 256.5 on 7 November 2014. Banks are also covered, as the MNB sold them EUR 7.8bn on 10 November, which they have since swapped for CHF. So what remains an issue of financial stability in this regard are much smaller amounts of domestic debt, in various non-financial sectors. Of these, households had CHF 0.48 bn in personal and car loans in November 2014. Exact figures on other sectors are not readily available, but we estimate the CHF debts of non-financial enterprises (excluding companies with a Swiss background) at CHF 2bn at most, and the government's CHF debt at CHF 1.6bn at most. In terms of the direct impact, this is not negligible, but pretty limited.