Only MKB Bank has said that it will not offer any new FX mortgages. As of now at least, all of the other banks continue to offer these products. I'm currently in the process of re-financing some of my properties in Hungary and have gotten several offers this week of EUR mortgages. I'd imagine that regulations on the withdrawal of FX loans are now tighter than before and e.g. Volksbank has stated that they will be stricter in the future with CHF loans, but it's simply not true to say that HU banks are no longer lending in foreign currency loans.
If Hungary decides not to accept the IMF loan, the country can still use it as a tool to make tougher decisions that otherwise would have been politically difficult. There has already been a public-sector wage freeze and a scrapping of 13th-month payments in 2009. Further tightening, particularly of the tax, educational and social welfare systems, would help things too, but Hungary is already well on its way to meeting all of the ERM2 criteria within two years. This would have seemed impossible two years ago!
I have no huge respect for Gyurcsany and his 'policies', but the authorities have certainly not 'painted themselves into a corner'. The reality is that since 2006, the Hungarian economy has come back from the brink of disaster, with stringent economic policies, which have proven to be extremely successful by any standard. The current budget deficit is 3.4% for this year. The downside is that these tough measures have had an expected side effect on GDP growth and local consumer confidence, which is not good at the moment. This situation won't change overnight and Hungarians will undoubtedly experience a few more difficult years.
If HU does accept the IMF loan, then the Euro-adoption date will be sooner than if it doesn't. This will transform the financing situation for local consumers and businesses. However, accepting the loan will possibly create further long-term problems for Hungary. What the country really needs to do, but has not been able to deal with so far, is to reform the key areas mentioned above and enter the Eurozone on a firmer footing.
Two weeks ago, when everyone was unrealistically worrying about Hungary becoming the next Iceland, I converted another chunk of EUR to HUF at an exchange rate of 282. (It could of course fall again, but for now, it's at 255). I'm also in the process of more than doubling my current financial commitment to Hungary over the course of the coming year, as real opportunities are available for locals at the moment, if they have the cash available.
JohnBoy, I'm not sure what the specific goals of your investment management company are, but I agree that short-term prospects are not good for HU. However, specifically in the property sector, I don't know of anywhere else in Europe at the moment, where I can get a relatively easy 8-10% rental return on the kind of premium properties which never come up for sale in neighbouring capitals, at roughly half the price of those neighbouring capitals, many of which have much deeper economic problems than Hungary, mainly due to an over-extended credit and property inflation bubble.
Banks all over the world are having liquidity problems. Relatively speaking, Hungary is a stable position. It's also the case that in around four years' time, Hungary will be using the Euro, so all existing FX mortgages are likely to be converted to EUR at that time. As long as (the 80% foreign-owned banks) can fund their short-term FX borrowings until then, they will be able to get over this hump. I don't imagine that credit growth will be high during this intervening period as even with FX mortgages, the terms of take-up are strongly in favour of the lender. The major risk is if the HUF loses more than 25% of its current value, which seems unlikely.
This is simply inaccurate. When you live here and speak regularly with various groups of local economic analysts, you get a totally different picture than the largely inaccurate accounts in the foreign press.
If Hungary decides not to accept the IMF loan, the country can still use it as a tool to make tougher decisions that otherwise would have been politically difficult. There has already been a public-sector wage freeze and a scrapping of 13th-month payments in 2009. Further tightening, particularly of the tax, educational and social welfare systems, would help things too, but Hungary is already well on its way to meeting all of the ERM2 criteria within two years. This would have seemed impossible two years ago!
I have no huge respect for Gyurcsany and his 'policies', but the authorities have certainly not 'painted themselves into a corner'. The reality is that since 2006, the Hungarian economy has come back from the brink of disaster, with stringent economic policies, which have proven to be extremely successful by any standard. The current budget deficit is 3.4% for this year. The downside is that these tough measures have had an expected side effect on GDP growth and local consumer confidence, which is not good at the moment. This situation won't change overnight and Hungarians will undoubtedly experience a few more difficult years.
If HU does accept the IMF loan, then the Euro-adoption date will be sooner than if it doesn't. This will transform the financing situation for local consumers and businesses. However, accepting the loan will possibly create further long-term problems for Hungary. What the country really needs to do, but has not been able to deal with so far, is to reform the key areas mentioned above and enter the Eurozone on a firmer footing.
Two weeks ago, when everyone was unrealistically worrying about Hungary becoming the next Iceland, I converted another chunk of EUR to HUF at an exchange rate of 282. (It could of course fall again, but for now, it's at 255). I'm also in the process of more than doubling my current financial commitment to Hungary over the course of the coming year, as real opportunities are available for locals at the moment, if they have the cash available.
JohnBoy, I'm not sure what the specific goals of your investment management company are, but I agree that short-term prospects are not good for HU. However, specifically in the property sector, I don't know of anywhere else in Europe at the moment, where I can get a relatively easy 8-10% rental return on the kind of premium properties which never come up for sale in neighbouring capitals, at roughly half the price of those neighbouring capitals, many of which have much deeper economic problems than Hungary, mainly due to an over-extended credit and property inflation bubble.