Budapest, 23 March 2016 – Based on last year's data, the MNB's debt cap rules supported responsible lending and had no substantial negative impact on lending outflow. The MNB reviewed the experiences of the practical implementation of the rules aimed at preventing the households' debt overhang and made some revisions in the regulation. The modifications did not affect the values of the maximum payment-to-income ratio and the loan-to-value ratio, but they provide preferential treatment for mortgage loans with lower interest risk and longer interest period, and reduce the customers' administrative burdens. The new regulations will enter into force on 1 May 2016.
The MNB's debt cap rules, aimed at preventing the households' debt overhang, entered into force on 1 January 2015. According to the data of the past one year, the MNB Decree on the regulation of the payment-to-income ratio and the loan-to-value ratio supported responsible lending and – as a result of the properly calibrated limits –had no substantial negative impact on lending outflow. The MNB examined the market experiences related to the application of the debt cap rules and – with the aim of reducing the consumers' administrative burdens, supporting responsible lending and facilitating the lending processes – exercised some modifications in the regulation.
The modifications have no impact on the values of the payment-to-income ratio and the loan-to-value ratio; instead they introduce changes in three major areas. In the future, the instalments of the mortgage loans with an interest period of at least five years can be taken into account in the payment-to-income ratio with a preferential, 85 per cent weight, thereby supporting the spreading of mortgage loans with longer interest periods, bearing lower interest risk. In addition, upon increasing the limit of credit facilities at the customer's request within three years on the first occasion in each calendar year, it will not be necessary to submit an income certificate in case of problem-free cases, thereby reducing the administrative burdens of the consumers. Finally, the so-called "de minimis" limit has also been raised: in the future, the loan amount below which it is not necessary to apply the regulation will increase from two hundred thousand forints to three hundred thousand forints. This modification also reduces the consumers' administrative burdens.
The central bank has conducted consultations with the market participants and the European Central Bank about the modifications entering into force on 1 May 2016. As regards the issues not requiring the modification of the decree, in order to foster uniform market practices, the MNB will soon provide guidance on its website in the form of "Frequently Asked Questions".
The text of the MNB Decree is expected to be published in the Hungarian Official Gazette at the end of March 2016.