Hungary's official Home Start math doesn't add up, but we already have an idea of number of applicants

Gergely Gulyás presented the following data on the Otthon Start Programme:

• In the first three weeks, banks received an average of almost 1,000 loan applications per day. There are now positive credit assessments and disbursements have begun.
• The average loan application amount is HUF 33 million.
• Banks have already received loan applications totalling HUF 380–400 billion.
• Over 80% of applicants are under 40 years of age, with an average age of 34.
• Applications are evenly distributed across the country in proportion to the population, with one-third relating to Budapest and its agglomeration.
• Newly built properties account for over 10% of the total.
• The increased interest is reflected in the 26,000 new residential property advertisements that appeared by October, which is a 20% increase compared to the same period last year.
• The number of housing construction applications is also rising, with the Home Start Programme Office and the Ministry of Construction and Transport having already received tens of thousands of applications from developers and continuously reviewing them.

Based on the HUF 380–400 billion worth of loan applications and an average loan amount of HUF 33 million, the number of Home Start loan applications received to date is estimated to be between 11,500 and 12,100. However, this is inconsistent with the claim that banks received 1,000 applications per day in the first three weeks. Based on five working days per week, this would only equate to 15,000 applications for the first three weeks. We are now in the sixth week of the programme. Gergely Gulyás did not mention that the HUF 380–400 billion figure would only apply to the first three weeks. Even based on 1,000 applications per day, this figure would still be too low for this period.

Based on Duna House's transaction estimates, a total of 24,795 apartments were sold in Hungary in July and August. Realistically, nearly half of these could have been submitted as applications for a Home Start loan in September and early October. This could give us the 12,000 loan applications referred to by Gergely Gulyás by the beginning of October. However, we do not know the average time taken between the date of the purchase agreement and loan approval.

We do not yet know the rejection rate for Home Start. However, if only half of the HUF 380–400 billion worth of applications mentioned by Gergely Gulyás were concluded in October (assuming that only a fraction of this was concluded in September), this would still represent HUF 190–200 billion worth of Home Start loan agreements in one month. This is a significant increase compared to the HUF 130–150 billion worth of home loans granted in previous months. Together with the market loans, the share of which is shrinking to a minotiry, this would represent an amount more than one and a half times the size of the home loan market.

In response to the experiences of the past month, new decisions have also been made to make the programme more efficient and streamlined. State Secretary Miklós Panyi will announce these on Friday, according to Gergely Gulyás. Incidentally, a draft of the government's planned amendments was published recently, and Miklós Panyi spoke about some of the changes in a Facebook video.

So far, two banks have released figures on Home Start:

• at MBH Bank, the average loan amount is HUF 33 million, the term is 23 years, and the average age is 36, while
• at K&H Bank, the average loan amount is HUF 37 million and the term is 22 years.

Cover image (for illustration purposes only): Portfolio