Hungarian Prime Minister Viktor Orbán has announced a new 3% subsidised loan scheme for first-time home buyers. While the government frames it as a major step towards affordable housing, critics warn it may further fuel price increases without addressing underlying supply issues.
Prime Minister Viktor Orbán announced on Wednesday via Facebook that first-time home buyers in Hungary will soon be able to apply for a 3% subsidised loan. "Government decision: 3% preferential loan for your first apartment or house. For anyone. Anywhere. Details coming soon!" he wrote in his post.
At a press conference today, Minister of the Prime Minister's Office Gergely Gulyás explained that this measure aligns with the objectives outlined in the Prime Minister’s annual policy assessment, specifically the Demján Sándor Programme, which aims to promote affordable housing. The programme also covers expanding dormitory capacities, renovating rural homes, introducing tax incentives for employees, and capping bank interest rates at 5%.
To qualify for the subsidised loan, applicants must not own more than 50% of a residential property and must have at least two years of social security contributions at the time of application. The maximum loan amount is HUF 50 million, with a required co-payment as low as 10%, in line with central bank guidelines. Properties eligible for purchase must cost under HUF 100 million, with a price cap of HUF 1.5 million per square metre. The scheme can be combined with other discounts and housing loans.
The government has agreed with the Banking Association that the loan will become available from September. Borrowers will still need to meet standard creditworthiness requirements. Detailed regulations on the subsidies will be released soon.
Officials estimate that the annual budgetary cost of the 3% housing loan could stay below HUF 50 billion this year and next, though the final figure will depend on demand and market dynamics. For a HUF 50 million loan, the state’s contribution through the interest rate subsidy could total between HUF 15 and 25 million over the loan’s duration, depending on market interest rates.
The loan can be combined with other support schemes, such as CSOK Plus, potentially enabling young couples with children to receive up to HUF 100 million in total support. The government is working with banks to simplify and speed up the application and approval process, since the interest rate subsidy costs are fully covered by the state.
Gulyás acknowledged that the scheme could boost real estate demand and slow any potential price declines. He noted that while overall prices might not decrease, the rate of price increases could moderate. To further support supply, the government is maintaining a 5% preferential VAT rate for new homes.
The technical details of the interest subsidy are still being finalised with banks, with a possible initial one-year phase. From the borrower’s perspective, the scheme will function similarly to the Széchenyi Card Programme for SMEs, where the state reimburses banks for the difference between market and subsidised interest rates.
