Government Decision on Otthon Start Could Put Some Homebuyers in a Difficult Position

Hungary’s Otthon Start housing loan has made mortgages cheaper and easier to access, but it has also pushed more buyers toward high-debt purchases and added pressure to house prices. A government decision linked to the program could now leave some buyers exposed if they signed preliminary contracts for housing projects that lack the necessary permits.

The 3% fixed-rate loan began a year ago and quickly reshaped the mortgage market. Between September 2025 and June 2026, banks signed housing-loan contracts worth 2,487 billion forints, with 78% of that amount, about 1,944 billion forints, coming through some form of subsidized scheme. Otthon Start accounted for a major share of the total.

Housing loans also made up a larger part of new household lending. They represented 61.4% of new disbursements in the first half of 2026, compared with 49% a year earlier. Banks continue to compete for Otthon Start customers as the program attracts borrowers.

The easier financing has encouraged buyers to take on larger loans relative to the value of their homes. The proportion of mortgages with loan-to-value ratios above 70% rose by 17.5% between April 2025 and March 2026. By March, such loans accounted for 45.5% of contracts. Loans above an 80% ratio had represented about 3% to 4% of transactions before the program began, but their share rose to 18% to 20% from October 2025. Among borrowers aged 18 to 30, 68% of mortgages issued since the program started had a loan-to-value ratio above 70%.

House prices climbed alongside the lending boom. Hungary’s Central Statistical Office recorded a 20.2% increase in underlying house prices in 2025 from the previous year. Price growth slowed in the first quarter of 2026, but the program’s market effect remained visible because housing supply did not adjust as quickly as demand.