The Hungarian property market had been experiencing difficulties in recent years due to the country's economic uncertainty and rising interest rates.  

Context 

This had a negative impact on home purchases, especially among the younger population. While 80% of Hungarians over the age of 40 own their homes, that figure drops to 40% among young people aged 18 to 40. Therefore, with the aim of reversing this situation, the Hungarian government launched Otthon Start. 

How does Otthon Start works? 

This programme offers fixed-rate mortgages with an interest rate of only 3%, backed by the government. Unlike previous programmes, Otthon Start does not impose restrictions on age or family status and is open to young people. Borrowers can apply for up to HUF 50 million (USD$ 146,975), although the eligibility criteria are strict. Applicants are assessed on factors such as the length of their Social Security contribution period and whether they have previously owned property. 

Who can participate in the programme? 

• Be over 18 years of age (no upper age limit) 

• Not have owned more than 50% of an urban residential property in the last 10 years. Or own a property of low value (less than HUF 15 million). 

• At least 2 years of social security contributions 

• Reside in Hungary for 180 days 

• Have a clean record 

• Be free of public debt 

• Provide proof of bank solvency 

Why is this programme successful? 

The main advantage of the programme is its predictability. The average mortgage interest rate in Hungary is currently 6.91%, one of the highest in the EU. In the meantime, the Otthon Start loan offers a significantly lower fixed rate of 3%. 

According to the latest data, these advantages have led to a 110-point increase in housing demand, a record in the 12-year history of the indicator. 

Current housing issues 

Despite this, certain conflicts remain. The required 10% down payment could be higher if property records are out of date. Furthermore, the subsidy does not cover cases where a buyer wishes to purchase a family member's share of an inheritance, and the 3% loan cannot be used for garages or storage rooms. 

Otthon Start aims to boost new growth in the mortgage lending sector from Hungary, serving not only as an economic stimulus but also as a social policy tool, helping people who have been deterred by unpredictable monthly payments to finally buy their own home. 

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