Hungary to offer preferential 3% loan for first-time home buyers

Viktor Orbán has announced a 3% subsidised loan for first-time buyers.

"Government decision: 3% preferential loan for your first apartment or house. For anyone. Anywhere. Details coming soon!" read the post, which appeared on the Prime Minister's social media page shortly before 3 pm today.

The recent announcement has raised many questions, and everyone is waiting for details to be provided in order to assess the measure's economic impact. The most interesting part of the short announcement was the phrase 'for anyone, anywhere'. This suggests that the aid is not sufficiently targeted (the only limiting factor is the 'first buy' clause), which would result in limited cost effectiveness. (An effective interest rate of 3% does not exist on the market for a wide range of real estate purposes, except for CSOK Plus.) However, given the announcement, many people may expect this 3% preferential interest rate to apply to them (due to the phrase 'for anyone, anywhere').

It will be interesting to see whether the difference between market interest rates and the 3% interest rate is borne by market players or the state will pitch in. If the state gets involved in this, how will it do so? More importantly, where will the funding come from? This year's budget is already in trouble, and next year's is very shaky. It is also important to note that this measure does not appear to address the supply side of the market; rather, it supports the demand side. As such, it could further fuel an already strong market and lead to price increases. In other words, it does not necessarily alleviate the housing crisis.

An important detail we have learned

Portfolio has learned that from the debtor's perspective, this scheme will function in a similar way to the loan products offered by the Széchenyi Card Programme for SMEs. In other words,

the state will pay and reimburse the bank for the costs arising from the difference between the interest rates on market loans and subsidised loans.

It is worth noting that, in the short term, the budgetary impact of such a measure is marginal, depending on the number of loan applications processed and approved. However, in the longer term, it places a burden on public finances.

In practice, an interest rate of 3% on a loan means that the monthly repayment for a 20-year term would be HUF 55,460 for every 10 million forints borrowed. At today's realistic interest rate of 6.5%, the monthly repayment would be HUF 74,558, representing a saving of 26% over the same period.

The average interest rate on market-rate mortgages has remained at around 6.5% for over a year, which is no coincidence; government bond market yields have also remained fairly stable during this period. The average APR (annual percentage rate) on new home loans is 7.1%.

What is driving the government?

Over the past year, one of the pillars of the government's economic policy action plan has been the provision of affordable housing. The government pledged to encourage the construction of 25,000 homes a year, with a total of 150,000 to be built in Hungary within five years. This would be achieved through affordable prices per square metre and rent (HUF 1 million per sqm in Budapest) and cheap housing loans with maximum interest rates of 5%.

If a young person wants to rent an apartment, they will have to pay more than 50% or occasionally around 60% of their salary in rent.

'The biggest overhead is not electricity or gas, but paying the rent,' said Economy Minister Márton Nagy at the time. "According to the OECD, a housing crisis occurs when the ratio of rent to monthly income is above 30%, and the level is critical when it is above 40%," he said. In Budapest, the ratio is much higher — clearly a housing crisis," the minister said at the time.

At the time, the programme identified ten elements, one of which was a housing programme to address the housing issues faced by young people. It was decided that, from 1 April to 31 October 2025, banks would introduce a voluntary interest rate cap for first-time buyers under 35 years of age. The annual fixed interest rate for the first five years would be a discounted maximum of 5%, with no additional bank charges for disbursement, assessment, intermediation, and so on.

In this context, the government announced plans to launch a new HUF 200 billion Housing Capital Programme to boost economic activity. This programme should, according to the government's expectations, stimulate HUF 800-1000 billion worth of development in the housing market and contribute to the construction of 30,000 homes over five years. It was later revealed that the budget would be increased to HUF 300 billion.

According to data from ingatlan.com, first-time homebuyers are not in an easy position. In June 2025, the average price of second-hand condominium apartments measuring less than 45 square metres and located in the capital was HUF 55 million. Brick-built apartments were worth an average of HUF 56 million, while the average price of apartments in tower blocks was HUF 50 million.

The affordability challenges faced in larger cities are forcing young first-time buyers to compromise, with many choosing to move into smaller flats to save money. That's why ingatlan.com has examined how much first-time buyers are paying for apartments in Budapest and its surrounding areas.

According to data from ingatlan.com, the average price of a used condominium apartment for sale in the capital in June 2025 was HUF 55 million. Brick-built apartments were worth an average of HUF 56 million, while the average price of an apartment in a block of flats was HUF 50 million. The cheapest apartments can be found in districts XXIII, XX and XXI, where the average price of these properties is 32, 38 and 39 million forints, respectively. District II is the most expensive district, with the average price of second-hand garages of up to 45 square metres standing at HUF 73 million.

Debrecen is the most expensive of the county seats and university towns, with an average second-hand apartment price of HUF 45 million. In Győr and Eger, the average price is HUF 40 million, while in Szeged and Székesfehérvár, it is HUF 30 million. Salgótarján and Békéscsaba are among the cheapest, with second-hand apartments measuring less than 45 sqm costing an average of between HUF 14 and 21 million.

At the national level, rents rose by 0.8% in May compared to April, but fell slightly by 0.2 in Budapest. Year-on-year, however, rents continued to rise: nationally, they increased by 7.9%, and in Budapest by 7%, according to the May rent index of KSH-ingatlan.com. Analysis by ingatlan.com also showed that the average monthly rent in Budapest was HUF 260,000 in mid-June, compared to HUF 230,000 in Debrecen, HUF 190,000 in Győr, and HUF 160,000 in Pécs and Szeged.

Cover photo: MTI Photo/Prime Minister's Communications Department/Zoltán Fischer