A revival on the mortgage market?

Ádám Bakos
CFA – Senior bond portfolio manager

At the start of February the National Bank of Hungary (MNB) announced that it would launch a programme to support the development of the forint mortgage loan and mortgage bond market, and the first buyback auction was duly held on 10 March. In this regard, our aim here is to outline the current status of the mortgage bond market in Hungary, to discuss the motivations that drive players in the market, and to assess the possible impact of the announced MNB programme.

The MNB’s announcement of 10 March 2010 stated: “Market players submitted bids totalling HUF 21.5 billion in the secondary market purchase tender for mortgage bonds held for the first time by the MNB on 10 March 2010, with offers received for nine of the ten advertised mortgage bonds. Taking into account the information on secondary market prices at its disposal, the MNB adjudged that the bids were significantly less favourable than market yields, falling at least 50 basis points short of the latter, and for this reason it declined to accept them and declared the tender unsuccessful.”

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