BUDAPEST, Oct 22 (Reuters) – Hungary will expand the limit on mortgage rates from mid-November to include variable rate loans for small and medium-sized businesses to avoid a recession, Economic Development Minister Marten Nagy said on Saturday.
With inflation hitting 20 percent in September and rising and the economy faltering, Prime Minister Viktor Orbán’s government has It faces the challenge of curbing inflation by 2023. Mortgage rates. Power bills for average user households have also been frozen.
On Saturday, it announced 150 billion forints ($362 million) in subsidies to large companies to help with investments that improve energy efficiency, and extended capped interest rates on loans with commercial banks that shouldered the costs.
Nagy said the 3-month interbank rate will be capped at 7.77% on June 28 from the current rate of 16.69% after an emergency hike by the central bank on October 14. Effective through July 1, 2023, it remains the same as the current household loan rate, Nagy said.
Nagy said the stock of revolving loans is about 2 trillion forints held by 60,000 small companies, and the measure aims to prevent these businesses from paying 20 percent or more on loans.
“We want to keep the economy from going into recession next year and we have a chance to have 1% growth,” Nagy told a briefing.
“With this credit cap, we want to prevent another shock from rising payments on the corporate sector.”
In May, the government announced an 800 billion forint windfall tax on “extra profits” earned by banks, energy companies and other companies to plug budget gaps, hitting stocks in Budapest and spooking investors.
($1 = 413.9900 forints)
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Reporting by Krisztina Than; Edited by Kirsten Donovan
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