Budapest, October 28, 2024 – In order to facilitate the bank financing of green real estate and thereby support the improvement of the energy efficiency of Hungarian real estate, the MNB decided on the green differentiation of the borrower-based measures. Based on the amendment, from January 2025, in the case of loans that meet the green conditions, the maximum loan amount that can be borrowed can reach 90 percent of the collateral value, and up to 60 percent of the borrowers’ income can be considered towards their debt service, regardless of its total amount. In addition, the MNB also supports the incorporation of green aspects into mortgage and personal lending processes by strengthening the green requirements of the “Certified Consumer-Friendly” certification.
Based on the decision of the MNB, from January 1, 2025, it will be possible to apply more favorable debt-service-to-income ratio (DSTI) and loan-to-value ratio (LTV) limits in the case of green real estate purchases and renovation loans. In the case of HUF mortgage loans with a fixed interest rate of at least 10 years that meet the conditions for green collateral and loan purposes determined based on the Green Preferential Capital Requirement Programme (purchase and construction of energy-efficient apartments, as well as efficiency-enhancing renovations), the LTV limit increases to 90 percent (regardless of whether the debtor is a first-time buyer). At the same time, in the case of loans that meet the conditions, the applicable DSTI limit rises to 60 percent, regardless of the customer's income.
LTV and DSTI limits from January 1, 2025
|
LTV limits |
||||
| Category | HUF | EUR | Other currency | |
| Mortgages | First-time buyers | 90% | 50% | 35% |
| Green collateral and loan purpose | ||||
| Financial lease | First-time buyers | 55% | 40% | |
| Green collateral and loan purpose | ||||
| Mortgages | Financial lease | 80% | 50% | 35% |
| Other borrowers | 85% | 55% | 40% | |
| Vehicle loans | 75% | 45% | 30% | |
| DSTI limits | |||
| Category | Period of interest rate fixation | ||
| Less than 5 years | At least 5 years but less than 10 years | At least 10 years or fixed | |
| Net monthly income < 600k HUF 600k HUF | 25% | 35% | 50% |
| Green loan purpose | 60% | ||
| Net monthly income ≥ 600k HUF 600k HUF | 30% | 40% | 60% |
Source: MNB
In addition, from April 2025, the MNB will also strengthen green lending processes through the Certified Consumer-Friendly loan products. The central bank's new expectations make it mandatory for lenders that offer Certified Consumer-Friendly Housing Loans (CCHL) to provide borrowers with their CCHL product available for specific green loan purposes as a green loan. In case of verified completion of the green loan purpose, customers must benefit from an interest rate discount of at least 0.5 percentage points (compared to a CCHL loan granted for an identical but non-green purpose), and the bank must make up the disbursement fee and the fee for an energy efficiency certificate from the borrower. From the point of view of creditors, the discounts are made possible by the potentially lower credit risk of green real estate, as well as the preferential green capital requirement provided by the MNB.
Increasing the energy efficiency of the housing stock through renovations can be supported by personal loans as well; therefore, the MNB also decided on a green review of the Certified Consumer Friendly Personal Loan (CCPL) certification. Accordingly, from April 2025, banks will have the opportunity to provide borrowers with a dedicated green interest rate discount of at least 3 percentage points if the specified loan purposes for the renovation of apartments are met.
The measures aim to strengthen domestic green home loan issuance, which is still in its infancy. The proportion of better-than-modern real estate collateral within the new home loan issuance is low, ranging from 10-20 percent since 2021 and only temporarily approaching 50 percent during the support period of the Green Home Loan Program. The spread of green home lending can also support the mitigation of prudential risks. Based on the so-called green hypothesis, the financing of energy-efficient properties may have a lower credit risk. Due to the lower maintenance costs, the borrowers can spend a larger proportion of their income on loan repayment, therefore their probability of default can be lower. In addition, the demand for green real estate collateral can be more resilient compared to less efficient real estates, i.e. the value of these real estates can be more stable during a crisis. By now, in addition to the growing number of international studies (EC-EEFIG (2022), Billio et al. (2022)), the first domestic studies are already available (Ertl et al. (2021), Hajnal et al.(2022), MNB Green Finance Report (2022)) about the "green hypothesis", which confirm its validity in our country as well.
Based on these, the green differentiation of the borrower-based measures – further strengthened by the green amendments of the Certified Consumer-Friendly framework – can support the energy renewal of the domestic real estate stock by introducing risk-proportional regulations that take into account the credit risk of collaterals and borrowers better, without substantially increasing the risks.
Learn more about the details of the green borrower-based measures
Learn more about the Certified Consumer-Friendly products
Central Bank of Hungary