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Mortgage Freeze: Households May Save HUF 11,000 for 6 Months

Ábrahám Vass 2021.12.23.

The interest rates on retail mortgages will be frozen at their October 27 levels, according to PM Viktor Orbán’s Wednesday announcement. This would be equal to a monthly savings of HUF 11,000 (EUR 30) for an average household, according to calculations. On the other hand, uncertainty and perhaps a steep increase may follow after the ruling’s expiration.

The law will take effect next year for a six-month period. In light of the regulation, the February installment February will already be lower than previous ones. The regulation will apply to new mortgages too.

According to economic site Portfolio‘s calculations (made in reference to unconfirmed, perhaps government sources), the move:

  • affects roughly one third of the outstanding mortgages
  • an average household may save around HUF 11,000 (EUR 30) a month
  • affects approximately 470,000 mortgages, meaning that the measure would cost banks some HUF 30 billion (EUR 81 million).

What might happen after the law’s expiration?

It is unclear what would happen once the half year period of the ruling expires at the end of June.

According to money.hu, the risk is perhaps even greater for the banks than just the loss of the aforementioned HUF 20-30 billion, as debtors may face a steep rise at the end of June that many of them would not be able to afford. If, as analysts expect, the three month [Budapest Interbank Offered Rate] BUBOR level reaches 5.5% by June 2022, the installment of a loan with the above parameters will jump from HUF 111,000 (EUR 300) to HUF 129,986 (EUR 351), equivalent to a 17% increase.

In addition, in certain cases, even 25-30% increases may be possible.

featured image illustration via Pixabay


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