New green mortgages coming to Hungary in April 2023

Published: March 27 2023

Contents

Though it’s not mandatory for banks to offer favourable interest rates; considering the energy efficiency of the property, green mortgage loan rates may be offered to the mortgage loan borrower.

From April, customer-friendly mortgage loan terms will get cheaper for those who buy energy-efficient homes. As per the announcement made by the Hungarian National Bank (MNB) in November last year, the qualified consumer-friendly mortgage loan (MFL) programme will come with lower costs for energy-friendly home loans that correspond with the MNB’s Green Capital Requirement Discount Programme.

Additionally, banks offering these types of loans will take over the one-time cost of the customer's credible energy certificate. These green mortgage loans may also come with a green interest rate discount for the mortgage loan borrower as well. Consequently, this progressive makeover in MFL programme will help homebuyers achieve their green housing goals at reduced expenses.

In order to qualify as an energy-efficient green loan, the new building's primary energy demand must be less than or equal to 80 kWh/nm/year, its classification should be at least BB, or in the case of a used property, the property should have attained a minimum grade of BB energy classification at the end of the renovation. Banks can also offer green loan interest rate discounts, but this is not obligatory, as they are not restricted by maximum interest rates at the green loans' section.

The banks that wish to participate in the MFL program get MFL certifications on their home loans. If banks no longer want to provide this kind of loan, it does not affect the status of the acquired consumer-friendly mortgage (MFL) default terms, which will remain unchanged. Although green MFL is a relatively soft law regarding bank requirements, some deducted cost may still be monitored by the MNB.

Additionally, there is no detailed data on how many banks are going to launch a unique green MFL loan in the upcoming period. MNB is currently examining the extent of the expected participation in providing discounted green MFL loans in the banking sector, and detailed results will likely make public in the annual Green Financial Report which is due to be released by May 2023.

Currently, out of eight credit institutions offering the MFL facility, only four cater to green mortgage loans with special granted discounts. They are K&H Bank, Takarékbank, Raiffeisen Bank, and CIB Bank. The discount rates of each bank differ, with Kamatkedvezmenyek.hu saying that CIB provides loans interest rates that are 0.5 percentage points lower than the standard home loans.

In contrast, Raiffeisen grants a 0.25 percentage point discount on the interest rate for green mortgages. At K&H, there are no interest reductions, but their green mortgage loans comply with the Green Capital Requirement Discount Program of the Hungarian National Bank. Takarékbank offers up to HUF 150,000 in savings on one-time costs to those who apply and are approved for their ECO loan.