(Bloomberg) — Hungarian Prime Minister Viktor Orban is ordering a freeze on residential mortgage rates as he seeks to shore up support ahead of elections. The shares of the country’s biggest bank fell the most since the pandemic hit the country last year.
Most Read from Bloomberg
The government will cap rates on mortgages at October levels for six months starting in January, Orban said in a video on his Facebook page Wednesday.
The premier has already capped fuel prices and touted increases in pensions and minimum wage before the tightly-fought parliamentary ballot due in around April. The latest mortgage measures aim to further relieve pressure on families as inflation accelerates, Orban said.
“We need to create a new line of defense,” he said. “We’ll freeze interest rates for households.”
Shares in OTP Bank Nyrt. fell 7.6% by the close in Budapest, the most since March 2020, dragging down the benchmark BUX index by 2.9%. The forint weakened 0.3% to 368.4 per euro, staying close to a record low.
The 3-month interbank Bubor rate — the benchmark for most variable-rate mortgages — stood at around 2% at end-October. But it has since approached 4% following a string of interest-rate hikes.
Central bank data shows 36% of residential mortgages had variable interest rates as of June 2021. There were 4.5 trillion forint ($13.9 billion) in residential mortgages outstanding in total as of October, according to a separate report by the regulator.
The central bank declined to comment on how Orban’s move may affect its interest-rate tightening campaign.
Most Read from Bloomberg Businessweek
©2021 Bloomberg L.P.
