MNB allows lenders to include FX funding for mortgage ratio calculation
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The National Bank of Hungary (MNB) will allow lenders to include FX funding in the calculation of the Mortgage Funding Adequacy Ratio (MFAR) from July 1, 2022, the central bank and financial market regulator said on Monday, according to a report by state news wire MTI.
Allowing the inclusion of FX funding, in addition to forint funding, in the calculation of the MFAR aims to "deepen the mortgage bond market and strengthen banks' drawing in of long-term funding", MNB said.
Expanding the market for mortgage bonds will allow lenders access to a bigger volume of long-term, stable funding, at favorable prices, which is advantageous from the vantage point of financial stability, it added.
MNB also postponed the implementation of stricter MFAR rules by one year, until October 1, 2023, to give lenders sufficient time to prepare for compliance in light of the uncertain macroeconomic and financial environment.
Almost a year earlier, the central bank announced plans to raise the required minimum level of the MFAR from 25% to 30%, to require the listing of newly issued mortgage bonds on the stock exchange and to reintroduce restrictions on cross-ownership of mortgage bonds by banks, with a planned rollout of October 1, 2022.
On Monday, MNB said the changes would come into force later in light of feedback from market players, the uncertain effects of the war on the financial system, current capital market trends, and longer preparation times necessary for FX issues.
The bank said the threshold of net retail mortgage lending stock requiring application of the rules will rise from HUF 10 billion to HUF 40 bln.
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