Hungary to support first home buyers with up to $443 million

By Anita Komuves and Gergely Szakacs

BUDAPEST (Reuters) -Hungary's government will support first home buyers with up to $443 million per year in interest rate subsidies under a new programme announced this week as right-wing Prime Minister Viktor Orban gears up for a closely-fought 2026 election.

In power since 2010, the veteran nationalist has struggled to revive Hungary's economy from an inflationary surge following Russia's February 2022 invasion of Ukraine, with the economy on track for a third successive year of near stagnation.

The move follows a raft of other measures, including big income tax cuts ahead of the election, pushing the total cost of Orban's family benefits to 4.8 trillion forints ($14.2 billion) next year, worth 5% of Hungary's economic output.

Orban aide Gergely Gulyas told a media briefing that the new scheme, which will provide subsidised loans with a 3% interest rate for first home buyers, would not have a big impact on this year's deficit, but costs would rise later.

"Depending on the number of applicants, in 2027, 2028 and 2029 this can cost between 50 billion and 150 billion forints ($148 million to $443 million)," Gulyas said.

Anyone looking to buy a first house or apartment will be able to borrow up to 50 million forints ($147,558) at 3% interest for a maximum of 25 years with a 10% downpayment.

Hungarian house prices more than tripled between 2010 and 2024, Eurostat figures showed, the fastest rate in the 27-member EU and far eclipsing a 55.4% average increase in the bloc.

Hungary's government increased its borrowing plan last month in part to fund its pre-election measures amid a weaker than expected economy.

Orban had hoped a rebound in economic growth would help him secure another term in next year's elections, when political analysts expect he will face the stiffest opposition challenge in over a decade.

Hungary's central bank, which left its base rate at the EU's joint-highest level of 6.5% last month, has ruled out rate cuts for the foreseeable future with inflation exceeding its 2% to 4% tolerance band.

($1 = 338.85 forints)

(Reporting by Gergely Szakacs and Anita Komuves. Editing by Mark Potter)