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Married Couples Spend Baby-expecting Loan Mainly on Buying Homes

One of the leading banks in Hungary, K&H, has disbursed more than 225 billion forints (EUR 558 million) worth of the so-called baby-expecting loan (babaváró hitel) in the past three and a half years, of which HUF 60 billion (EUR 148 million) were withdrawn in 2022. The bank’s market share in this segment increased from 11.8 percent in 2021 to 13.5 percent in 2022, the bank told MTI on Monday.

The statement recalled that the baby-expecting loan has been given another two years, according to the latest legislation, hence married couples can apply for it until the end of 2024. The loan is attractive mainly because it has an interest rate of 3 percent, compared to market loans, which are currently available at around 10 percent.

For a long time, it was not known what would happen to the baby-expecting loan, originally due to expire on December 31, 2022. Due to the uncertainty and the rapidly approaching deadline, several banks suspended the loan in December, but since then, positive news has brought it back on offer.

The maximum amount of the baby loan is HUF 10 million (EUR 24,700) and it is interest-free for the entire duration if at least one child is born in the family within five years.

In addition, a three year grace period can be requested after the birth of the child. The state will take over 30 percent of the current capital debt on the birth of the second child, and the full debt after the third child.

András Árva, the marketing manager of K&H responsible for the retail segment, said that at their bank, people have used the baby-expecting loan primarily for housing since the launch in July 2019. This trend is likely to continue this year, thanks in part to the fact that the baby loan has an extremely low interest rate compared to market housing loans.

Moreover, the government’s recent announcement on the extension of family allowances will also have an impact on the market, providing certainty and predictability to the credit market, according to real estate agency Duna House’s analysis. At the same time, László Balogh, chief economic expert at Ingatlan.com, a property website, said that the announcement at the end of the year that the rural family housing support (falusi CSOK) and VAT refund for newly built homes will be maintained until the end of 2024, in addition to the baby-expecting loan, has increased the scope for buyers.

The government’s measures are intended to provide predictability for families, because this will help them to have children, the Secretary of State for Families of the Ministry of Culture and Innovation said on Tuesday on Kossuth Radio. Ágnes Hornung pointed out that

with the new measures, such as the personal income tax exemption for mothers under 30, the government wants to cover the entire “life cycle” of people, and that supports will be adapted to changing circumstances and the current economic environment.

She added that the family support measures have been based on the same three main pillars for 12 years: to ensure that all children wanted are born as soon as possible, that families do not have to bear the financial burden of having children, and that there is a quality link between work and family life.

The Secretary of State stressed that the baby-expecting loan (considered a success story), has contributed to the birth of around 100,000 children in the last two years, and she added that the family housing support (CSOK) has helped one in four families to move into a new home in recent years.

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