BUDAPEST, Sept 10 (Reuters) - Lawmmakers from Hungary's ruling Fidesz party have drafted a proposal to help troubled foreign exchange loan holders, which would force banks to apply the middle rate when setting payments and ban arbitrary rises in interest rates.
According to the proposals laid out on Fidesz's website www.fidesz.hu late on Thursday, the lawmakers want banks to allow early repayment of mortgages without additional fees and are seeking to ban unilateral changes in loan contracts where these are seen as disadvantageous for borrowers.
They also propose that banks should automatically extend the maturity of loans by 5 years at the borrowers' request, and accept that the outstanding mortgage must not exceed the current market value of the real estate used as collateral.
As the forint weakens versus the Swiss franc, this boosts the forint value of the outstanding franc-based mortgages, sometimes to levels exceeding the value of the home put up as collateral.
Hundreds of thousands of Hungarian households are indebted in foreign currency, mainly in Swiss franc, and a recent rally of the franc versus the euro helped drive the forint to record lows against the Swiss unit.
On Friday the forint traded at around 218.30 to the franc, stronger than lows of 226 hit earlier this week, but still some 30 percent weaker than the levels at which most loans were taken out prior to the 2008 crisis.
Fidesz MPs said draft legislation based on the proposal would be drawn up by early October. Parliament starts its autumn session on Monday.
According to the proposals, banks would be banned from imposing late fees, punitive rates and extra costs on borrowers who are unable to pay their loan repayments for a long time.
Hungary's new centre-right government which took office in May had earlier imposed a moratorium on evictions until the end of the year.
(Reporting by Krisztina Than)