Budapest, Hungary – The Hungarian government unveiled a new financial assistance program today aimed at making homeownership more accessible for young adults and families.the initiative, detailed by Minister of Finance Mihály Varga during a press conference at the Ministry of Finance headquarters on Váci utca, offers subsidized loans and grants too first-time homebuyers.

The cornerstone of the program is a new loan scheme offering interest rates capped at 3% for loans up to 30 million Hungarian Forints (approximately €77,000 or $82,000 USD as of November 8, 2023). This rate is considerably lower than current market rates, which average around 7-9% for similar mortgages. The loan term can extend up to 20 years.

In addition to the favorable loan terms, eligible applicants can also receive a non-repayable grant of up to 2 million Hungarian Forints (€5,100 / $5,400 USD) towards the down payment. This grant is specifically targeted at families with at least two children. Single applicants are eligible for a smaller grant of 1 million Forints (€2,550 / $2,700 USD).

eligibility criteria include Hungarian citizenship, a minimum of five years of continuous employment, and no prior ownership of property. Applicants must also demonstrate the ability to contribute at least 10% of the property value as their own funds. The program will be administered thru participating commercial banks, including OTP Bank, Erste Bank, and Raiffeisen Bank.

minister Varga emphasized that the program is a key component of the government’s broader strategy to boost the housing market and support population growth. He stated that the initiative is expected to benefit approximately 50,000 households over the next five years, with a total budget allocation of 150 billion Hungarian Forints (€385 million / $410 million USD).

Context: Hungary’s Housing Market & Demographic Challenges

Hungary has faced a persistent housing shortage in recent years, particularly in Budapest and other major cities. Rising property prices,coupled with increasing interest rates,have made homeownership increasingly unattainable for many young Hungarians. According to data from the Central Statistical Office (KSH), average property prices in Budapest increased by 18% in the past year alone.

The government’s new program is also intended to address Hungary’s declining birth rate and aging population. The financial incentives for families with children are designed to encourage larger families and stabilize the country’s demographic trends. Hungary’s population has been steadily decreasing for decades, and the government has implemented a range of policies aimed at reversing this trend, including family support benefits and tax incentives.

Experts predict that the program will likely stimulate demand in the housing market,potentially leading to further price increases in certain areas. However,they also acknowledge that the program could provide much-needed relief for aspiring homeowners and contribute to a more stable housing market in the long term. Real estate analysts at Ingatlan.com have noted a meaningful increase in online inquiries regarding mortgage options following the announcement.