The Mortgage Funding Adequacy Ratio (MFAR), announced by the MNB in June 2015 and required from 1 April, 2017, ensures the long-term financing of residential mortgage loans with mortgage-based funds in the banking system. According to the Mortgage Funding Adequacy Ratio (MFAR) regulation, the outstanding forint residential mortgage loan portfolio with a remaining maturity of more than 1 year must be financed in a specified proportion with long-term HUF funds raised with the collateral of residential mortgage loans. Currently, this minimum requirement is 25 percent.
The MNB regularly reviews the MFAR requirement regarding market developments and financial stability goals with the intention of deepening the mortgage bond market, strengthening and diversifying demand. In light of this, the indicator changed several times, which meant both level increases and changes in content, primarily affecting the quality characteristics of acceptable funds, as well as limiting cross-financing. Funds based on mortgage bonds and covered by mortgage loans can be considered a stable, long-term form of financing, the cost of funds being relatively low thanks to their favorable risk rating. In this way, credit institutions can reduce their balance sheet maturity differences under favorable conditions, and in addition to the increasingly widespread loans with longer interest periods, they can also mitigate their interest rate risk. This can have a positive effect on loan interest rates and mortgage lending as a whole.
Calculation of Mortgage Funding Adequacy Ratio
Source: MNB
MFAR regulatory changes
| Applicable from | Modification |
| 1 October 2024 | Postponement of the green requirement for funds based on foreign currency mortgage bonds entering into force on 1 October 2024 for an indefinite period |
| 1 October 2023 | Postponement of the green requirement for funds based on foreign currency mortgage bonds entering into force on 1 October 2023 to 1 October 2024 |
| 23 December 2022 and 1 January 2023 | Postponement of structures strengthening financial stability goals (level increase, cross-ownership rules, expectation of stock market introduction) for an indefinite period and technical modification in order to ensure the acceptability of the new form of refinancing |
| 1 July 2022 | In addition to the forint, foreign currency mortgage-based funds are also accepted under certain conditions, raising the de minimis limit, postponing the tightening of financial stability goals to 1 October 2023 (since then it has been postponed again) |
| 1 July 2021 | Consideration of green mortgage-based funds with preferential weighting, introduction of strictures strengthening financial stability goals from 1 October 2022 (since then postponed) |
| 24 March 2020 | Relief related to the effects of the coronavirus, suspension of cross-financing restrictions |
| 1 February 2019 and 1 October 2019 | Expected level (25 percent) and the tightening of the de minimis limit and the quality of funds that can be raised |
| 1 October 2018 | Expected level (20 percent) and tightening affecting the quality of the funds that can be drawn |
| 1 April 2017 | Introduction of the MFAR regulation encouraging the increase of the HUF maturity consistency through the involvement of long-term, mortgage-based funds, with the expectation of a minimum level of 15 percent |
Source: MNB
Decree
Press Release
Press release on the amendment of the regulation (20 September 2024)