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• Hungary’s central bank has reported that the country’s banking system remained well-capitalised during 2025, while cautioning that risks in the housing market have increased.
• The National Bank of Hungary said house prices rose by 23.5% in nominal terms during 2025, contributing to higher market overvaluation.
• Housing market overvaluation increased to 22.5%, raising concerns about the potential for future price corrections.
• Borrowers’ average loan-to-value ratio rose significantly following the introduction of a subsidised mortgage programme for first-time homebuyers.
• The central bank noted that stable debt-service-to-income ratios and fixed-rate mortgages continue to support household repayment capacity.
Hungary’s banking sector remained financially resilient throughout 2025, although risks associated with the country’s housing market have increased amid rapid property price growth and expanding mortgage borrowing, according to the National Bank of Hungary (NBH).
In its latest Financial Stability Report released on June 2, the central bank stated that the banking system continues to be strongly capitalised. However, it highlighted emerging vulnerabilities within the residential property market and called for closer monitoring of developments in household lending activity.
The NBH noted that conditions in the household loan market warrant attention, particularly following the introduction of a state-subsidised mortgage programme launched in September 2025. According to the report, the average loan-to-value (LTV) ratio among borrowers increased from 59% to 68% after the scheme was introduced, indicating that homebuyers are financing a larger proportion of property purchases through debt.
At the same time, residential property prices recorded substantial growth during the year. The central bank reported that house prices increased by 23.5% in nominal terms during 2025, contributing to a rise in housing market overvaluation to 22.5%.
The report stated that elevated overvaluation levels increase the likelihood of a future correction in residential property prices. Such a correction could affect the value of collateral securing mortgage loans and potentially weaken loan coverage ratios across parts of the banking system.
Despite these concerns, the central bank pointed to several factors that continue to support financial stability within the household lending market. It noted that borrowers’ average debt-service-to-income (DSTI) ratios have remained broadly unchanged despite larger loan amounts being issued. According to the NBH, this reduces the risk of widespread loan defaults and provides an important safeguard against financial stress among households.
The report also highlighted that instalments under the subsidised mortgage programme remain fixed throughout the loan term, offering borrowers protection from future interest rate fluctuations.
The mortgage scheme was introduced by the government led by former Prime Minister Viktor Orbán, who was defeated in Hungary’s April 2026 general election. The programme formed part of broader efforts to stimulate economic activity after the country experienced a prolonged period of elevated inflation following Russia’s invasion of Ukraine in February 2022.
Under the initiative, first-time homebuyers became eligible for subsidised loans of up to 50 million Hungarian forints (approximately USD 151,062) at a fixed interest rate of 3%. The programme requires a minimum down payment of 10% and offers loan tenures of up to 25 years.
The previous government had estimated the annual fiscal cost of the subsidised mortgage programme at approximately USD 443 million. While the scheme has supported housing demand and mortgage activity, the central bank’s latest assessment indicates that policymakers will continue to monitor its impact on housing affordability, market valuations and financial stability.
5th Jun, 2025
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