MNB to launch HUF 200 bln green home loan credit scheme


Image by Jessica Fejos

The National Bank of Hungary (MNB) on Tuesday said it will launch a HUF 200 bln preferential credit scheme to support the purchase or construction of "highly energy-efficient" homes, state news wire MTI reports.

Under the Green Home Program, to launch in October 2021, the MNB will provide 0% refinancing to banks that will be lent to retail borrowers at a maximum fixed rate of 2.5%. Borrowers participating in the scheme may take out loans up to HUF 70 million with terms as long as 25 years.

The program will operate in the framework of the central bank's Funding for Growth Scheme (FGS).

MNB also decided on the launch of a HUF 200 bln Green Mortgage Bond Purchase Program "to contribute to the development of the domestic green mortgage bond market through targeted purchases". The central bank said it will review the programme when the HUF 200 bln purchase volume has been reached.

The program dovetails with a decision announced days earlier to modify the Mortgage Funding Adequacy Ratio (MFAR) to assign green mortgage-backed funds with terms over five years a weight of 1.5.

MNB will discuss further details of the program with market participants in the coming weeks.

The announcement of the programmes followed the approval by central bank policymakers of the MNB's Green Monetary Policy Toolkit Strategy, in the framework of which MNB "will continuously examine how certain tools of the monetary policy can help to achieve price stability and environmental sustainability objectives".

The bank noted that lawmakers approved in May amendments to the central bank act that expand its mandate to include the support of the government's environmental sustainability policy.

"In line with this new task set out in Act, the [MNB's mission is to implement monetary policy tools that - without jeopardizing its primary objective - would ensure long-term environmental sustainability, and thereby contribute to Hungary's sustainable convergence," the central bank said.

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