Hungarian gov't welcomes Banking Association 'voluntary' interest rate cap pledge

"Points 7 and 13 of the New Economic Policy Action Plan stated that the government aims to support affordable housing, improve housing conditions and develop a youth housing programme.

The voluntary interest rate cap of 5% announced by the Hungarian Banking Association contributes to the creation of a predictable and more favourable lending environment,

making the measure a decisive step forward in helping young people to find a home and to support affordable housing," the ministry said in a statement.

The Economy Ministry therefore recognises the social responsibility of the domestic banking system and welcomes the introduction of the voluntary 5% interest rate cap, which is in line with the government's housing targets.

According to the announcement of the Hungarian Banking Association, from 1 April 2025 to 31 October 2025, Hungarian banks may offer on a voluntary basis a mortgage loan scheme for first-time buyers under 35 years of age, where the annual fixed interest rate for the first five years is maximised at 5%, and the mortgage loan does not include any bank fees for disbursement, assessment, intermediary, etc.

This interest rate is very close to the 5% APR calculated for a sub-period initiated by the Economy Ministry.

The condition for the preferential interest rate is that the property must be a maximum of 60 square metres and the gross price must not exceed HUF 1.2 million per square metre, the ministry reminds.

The government is supporting home creation through the supply side as well, and as part of this, a new housing development capital programme has just been announced.

Two months ago, when the Economy Ministry announced the government's expectation of a "voluntary commitment" for banks, the bargaining over the maximum 5% APR for home loans promised to be even tougher. In the end - at least in public - there was not even a tug-of-war, and the absolute agreement between the two sides is a clear positive message for the market. Even if the commitment itself is not very ambitious in substance, it takes account of the realities of the financial and capital markets.

"It is up to each member bank to set its own interest rates, on a voluntary basis," the Banking Association said earlier today.

"However, we are promoting the government's intention to make this scheme available to young people under 35 years of age, by drawing the attention of our member banks to the possibility of voluntary commitment, to help them to get their first green home - with a maximum primary energy demand of 68 kWh/m²/year and a minimum energy rating of A+ - if it is less than HUF 1.2 million/m² and has a maximum size of 60 m².