OTP, Erste, and Raiffeisen file constitutional complaint over extended rate freeze
Several members of the Hungarian Banking Association have turned to the Constitutional Court, asking the Court to declare the rate freeze on retail credit and the extension of the rate freeze unconstitutional, the banking association said on Friday.
The banking association noted that the government introduced the interest rate freeze on floating-rate retail mortgage loans in 2021, citing the COVID-19 emergency. The decree was later extended even though the state of emergency was no longer in place, it said. Thus, the chargeable interest rate remained unchanged despite the increasing interest rate environment, it added. In spite of the decreasing inflation and the falling base rate, the government extended the rate freeze for the sixth time, until June 30, 2025.
The association pointed out that, as required by the regulatory and supervisory bodies, banks repeatedly informed clients about the interest rate risk of variable-rate mortgage loans and offered the option of switching to fixed-rate loans, which some clients have taken advantage of.
Since the rate freeze and its extension retrospectively, unnecessarily and disproportionately interfere with private legal relations without constitutional justification, several members of the Banking Association, OTP Bank, OTP Mortgage Bank, Erste Bank Hungary, K+H Bank and Raiffeisen Bank, have asked the Constitutional Court to declare the measure unconstitutional, it said.
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