EC approves extension of Hungarian mortgage support scheme

The European Commission said Tuesday it has authorised, under EC Treaty state aid rules, a six months prolongation until the end of 2010 of a Hungarian mortgage support scheme to help households affected by the financial and economic downturn.

Under the scheme introduced in July, the Hungarian State guarantees up to 80pc of banks’ “bridging loans” to applicants who are unable to service their home loans because of the financial crisis. The bridging loans cover part of the monthly instalments of the original mortgage loans for a period of up to two years.

The government has recently initiated amendments, including a six-month prolongation, to the support scheme which applies to mortgage loans concluded before June 30, 2009. The proposed amendments would ease access to the loans. Banks said earlier that only few applicants meet the conditions.

The Commission found that the extended measures were aimed at well-defined objectives of common interest and well designed to deliver these objectives and to limit distortions of competition. The measures thus provide aid of a social character to individuals, affected by a temporary income shock and at risk of losing their home, on a non-discriminatory basis and as such are compatible with the relevant article of the EC Treaty, the Commission said.