Melinda Nagy, a Hungarian special education teacher who knows little about financial markets, has started to lose sleep over exchange rates.
NagyÃ¢â‚¬â„¢s payments on her Swiss-franc denominated mortgage almost doubled after the Hungarian forint dropped 35 percent since 2008 against the Alpine nationÃ¢â‚¬â„¢s currency, forcing her to clean houses and work at a chicken ranch to avoid foreclosure.
Ã¢â‚¬Å“IÃ¢â‚¬â„¢d rather burn my house down than give it back to the bank,Ã¢â‚¬Â said Nagy, 43, who lives in the eastern Hungarian city of Hatvan. Ã¢â‚¬Å“WhatÃ¢â‚¬â„¢s the difference if I go to jail or become homeless?Ã¢â‚¬Â
The amount of franc-denominated mortgages in Hungary surged to 2.2 trillion forint ($10.2 billion) in May from 133.8 billion forint at the start of 2005, according to central bank data. Non-performing loans at local lenders such as OTP Bank Nyrt, Erste Group Bank AG and Foldhitel es Jelzalogbank Nyrt may rise to as much as 10 percent of total loans by the end of the year, said Tamas Erdei, president of the Budapest-based Banking Association.
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