August 27, 2018 / 7:33 AM / in 8 months

Tighter mortgage rules good for Hungary: Moody's

The Hungarian Parliament building is seen in Budapest, Hungary, May 29, 2018. REUTERS/Bernadett Szabo

BUDAPEST (Reuters) - Rating agency Moody’s on Monday said Hungary’s tighter mortgage lending rules, introduced by the central bank last week, were credit positive for the country as it proactively managed household debt, a big risk factor in the economy.

The central bank tightened its payment-to-income ratio rules for fixed-rate mortgages to mitigate potential risks from interest rate changes, a move that Moody’s said also helped banks weather a potential rise in interest rates.

“Although Hungarian household leverage is still very low by international standards, mortgages are the biggest contributor to household debt,” the rating agency said in its Credit Outlook analysis.

Reporting by Sandor Peto and Marton Dunai

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