Understanding the economic situation of people who took a foreign currency mortgage in Hungary and Poland

• Authors: Hanna Augustyniak , Adrienne Csizmady , József Hegedüs , Jacek Łaszek , Krzysztof Olszewski , Eszter Somogyi
• Languages of publication: EN

Abstracts

EN

In this article we show that significant differences between the foreign currency mortgage agreements in Hungary and Poland led to significant differences in monthly mortgage payments after the Global Financial Crisis (GFC) erupted. Hungarian banks were able to add a variable markup to the LIBOR3M that was connected to bank risk on top of the usual fixed markup. We compare the monthly mortgage payments and LTV levels of people who took out a CHF mortgage with those who obtained a local currency mortgage during the mortgage boom years of 2006–2008. We find that in the initial years of the mortgage CHF mortgages were cheaper than local currency mortgages, which allowed more people to buy housing. However, the GFC led to a deterioration of the exchange rate, and monthly payments and LTV levels (consequently?) increased. We analyse the mortgage costs and LTV levels of the 2006-2008 foreign currency (FX) mortgage vintages in Hungary and Poland between 2006 and 2020 and compare them to local currency mortgages. We also simulate the effects of changing housing prices and wages on mortgages in the cities of Budapest and Warsaw.

Keywords

EN

foreign currency mortgages; mortgage vintages; intervention

Discipline

• SOCIOLOGY: SOCIOLOGY

• Publisher: Institute of Sociology, Czech Academy of Sciences
• Journal: Critical Housing Analysis
• Year: 2022
• Volume: 9
• Issue: 1
• Pages: 1-15
• Document type: ARTICLE

Contributors

author

Hanna Augustyniak

• Critical Housing Analysis, redakce,Sociologický ústav AV ČR, v. v. i. Jilská 1, 110 00 Praha 1, Czech Republic

author

Adrienne Csizmady

• Critical Housing Analysis, redakce,Sociologický ústav AV ČR, v. v. i. Jilská 1, 110 00 Praha 1, Czech Republic

author

József Hegedüs

• Critical Housing Analysis, redakce,Sociologický ústav AV ČR, v. v. i. Jilská 1, 110 00 Praha 1, Czech Republic

author

Jacek Łaszek

• Critical Housing Analysis, redakce,Sociologický ústav AV ČR, v. v. i. Jilská 1, 110 00 Praha 1, Czech Republic

author

Krzysztof Olszewski

• Critical Housing Analysis, redakce,Sociologický ústav AV ČR, v. v. i. Jilská 1, 110 00 Praha 1, Czech Republic

author

Eszter Somogyi

• Critical Housing Analysis, redakce,Sociologický ústav AV ČR, v. v. i. Jilská 1, 110 00 Praha 1, Czech Republic