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The punters love it, the banks seemingly can’t get enough, the construction industry can’t wait long enough, and the Prime Minister’s Office head, Gergely Gulyás, can’t praise it enough.
The government’s Home Start program, offering mortgages at a 3% fixed-rate of interest to first-time buyers, had attracted “more than 1,000 applicants” a day since its launch on Sep. 1, Gulyás told reporters at the government press conference on Sep. 11.
This result makes the scheme the»“fastest uptake of credit since the regime change [of 1989-90],” he added. The construction sector has been boosted by nearly 30,000 applications for Home-Start properties in the previous three weeks.
The upbeat news comes not only from government representatives: a survey involving more than 10,000 respondents in March revealed half would consider buying a residence with a loan, while in a follow-up at the beginning of August, that number had jumped to 71%, according to László Balogh, an economist with real-estate agency ingatlan.com, as reported by website 24.hu.
In truth, the stampede was hardly unexpected: the program, first outlined by Prime Minister Viktor Orban in early July, has been heavily promoted from the off. Even more pertinent, the scheme’s 3% fixed-rate of interest is less than half that otherwise charged by banks operating according to market rates, which currently hover around 6.5-7%. In short, for successful applicants, it’s a steal.
So, what’s not to like? This side of the story has received far less media coverage. With most economic analysts tied to banks, the same banks that in many cases hope to offer the loans and secure loyal customers for the next quarter century, this paucity of critical analysis is perhaps not surprising.
However, György Surányi, professor of economics at Corvinus University, a former chairman of CIB Bank, and former governor of the National Bank of Hungary, is one independent voice willing to comment on record.
A veteran critic of various government home-subsidy schemes, beginning with the last gasp efforts of the Kadar (communist) regime to ease the burden of first-time buyers in the late 1980s, he made his political independence clear from the off when the Budapest Business Journal interviewed him for this article.
“First of all, I would start by saying that for 20 years, subsequent governments have mismanaged the housing sector. They have almost exclusively focused on the demand side, which means that the decisions introduced to facilitate the availability of housing have excessively contributed to inflation in the real estate sector,” he said.
According to Surányi, Hungary leads the European Union in this respect, with real estate prices soaring 290% in the decade between 2015 and 2025.
“It’s been a bonanza for investors, but not for ordinary people, because wage [levels] in relation to house prices have deteriorated […] in the past 15-20 years,” he underlined.
State Secretary Miklós Panyi of the Prime Minister’s Office seemingly addressed this question in mid-August, confidently telling the Index website that Home Start would “more than pay for itself” through tax revenues, real estate duty and secondary economic effects.
Surányi dismisses this argument, pointing out that the real-estate duty, though it will offset the interest-rate subsidy for the first year, is only a one-off item. Moreover, despite HUF 300 billion in subsidies being offered to developers to boost the supply side, there will be a lag of two-to-three years before the construction industry can meet the increased demand.
“Meanwhile, [home] prices will shoot up again,” he says. Surányi is not against some form of financial assistance, particularly for first-time buyers, provided these are carefully targeted and not so loose as, for example, the subsidies offered by the first Orbán government in 2001.
These, he says, “were overwhelmingly absorbed by the upper 20% of society” and led, in more extreme cases, to individuals “buying up to six different subsidized properties.”
In this respect, the various limits of Home Start loans, notably the price cap of HUF 1.5 mln per square meter on purchases, are “a step forward” compared to earlier schemes, Surányi says. However, he argues that those with HUF 100 mln available in cash “belong to the upper 1-2% of Hungarian society, so there is no need for [any subsidies for such buyers] at all.”
Whatever, while the upper price limits restrict purchases in Budapest to an extent, to put the same cap on property in the remote countryside is a serious mistake.
“In a small, rural village, for HUF 100 mln, you can buy a whole street!” he exclaims, quickly adding “Well, that’s an exaggeration, but for HUF 20 mln-30 mln, you can buy a reasonable quality house in the countryside and HUF 150 mln […] is dramatically excessive.”
Thus, in such locations, Home Start will have a massive impact “because the cheap money will drive up demand and prices will jump,” he says, arguing that the different cap conditions should have been applied to Budapest, larger cities and more rural locations.
But for Surányi, who as the MNB governor had to grapple with the consequences of excessive spending by successive governments in the mid-1990s, the biggest concern with Home Start is the potential burden facing future administrations caused by the unhedged interest rate costs in the coming decades.
“No one knows what inflation is going to be in five, 10 and 25 years on. This does not mean that I don’t have sympathy with helping [home buyers], but it [the Home Start program] should have been incomparably better targeted, and adjusted to the existing schemes, because the existing scheme, plus the new ones, are going to excessively burden the budget for years to come,” he warned.
“If it [the reference interest rate] shoots up, it’s again going to be the taxpayer who will be channeling subsidies to the borrowers.”
As this issue of the BBJ went to press, ingatlan.com reported that residential property prices in August were up 14.7% nationwide and 21.3% in Budapest over the past year. On a monthly basis, prices rose 1.1% nationally and 1.4% in the capital.
Successful applicants may take out a mortgage loan to a maximum value of HUF 50 mln.
The loan carries a 3% fixed interest rate with a maximum repayment period of 25 years.
It may be used in the purchase of an apartment valued at up to HUF 100 mln, or a house up to HUF 150 mln.
The price of the property is capped at HUF 1.5 mln per square meter.
Applicants must be first-time buyers or have held no more than a 50% stake in a home in Hungary in the last 10 years. Although these mortgages are primarily aimed at younger people, there is no age limit on who may apply.
Applicants must have a minimum 10% down payment on the residential home to take out the Home Start mortgage.
Foreigners with legal residence in Hungary may be eligible for Home Start Loans, subject to general conditions applying to non-Hungarian citizens.
This article was first published in the Budapest Business Journal print issue of September 19, 2025.
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