Budapest, October 30, 2025 – In line with its practice in recent years, Magyar Nemzeti Bank (MNB) has reviewed the adequacy of its macroprudential toolkit affecting the domestic real estate and mortgage lending market and has adopted several targeted measures to strengthen financial stability on 1 September 2025. In recent weeks, the central bank has also reached out to market participants regarding, among other things, the amendment of the mortgage funding adequacy ratio (MFAR) regulation. The amendment further strengthens the requirements regarding the stable funding of mortgage loans and supports the development of the market of mortgage-backed funds.
In view of the increased real estate market and related lending risks, the consultation held with credit institutions in the recent period, and the launch of the ‘Home Start’ program, which significantly affects the real estate market and lending, the MNB decided on 1 September 2025 to amend its macroprudential toolkit targeting real estate lending related systemic risks, including the mortgage funding adequacy ratio (MFAR) requirement.
Following banking sector consultations covering the details of the amendments, the MNB decided on the final content of the amendment of the MFAR regulation.
From 1 November 2025, in order to maintain – in the face increasing average loan amounts – the exemption of small institutions that are not significant in terms of systemic risk and are responsible for only 1.2 percent of the retail mortgage stock, the so-called de minimis limit for the mortgage loan stock will be increased from HUF 40 billion to HUF 100 billion. Since the 2022 review of the limit, the amount of disbursed loans has increased significantly, which is expected to be further strengthened by the launch of the ‘Home Start' program. In the absence of this amendment, due to dynamically increasing house prices and mortgage loan stocks, smaller credit institutions could exceed the limit even without a change in their systemic importance, which would increase their compliance burden and adversely affect lending competition. The modification does not expand the scope of banks that were already exempt.
The other amendments will enter into force on 1 October 2026 in order to allow sufficient preparation time. To diversify funding and mitigate contagion effects, the central bank will introduce measures to mitigate the cross-selling of mortgage-backed securities among banks, the stock exchange listing of newly issued covered bonds will be required, and to stimulate competition and reduce adjustment costs, other mortgage-backed securities in addition to mortgage bonds will also be accepted as stable funding in the MFAR.
The amendments allow the emergence of instruments that are currently not present on Hungarian capital markets, but are widespread internationally in several countries, contributing to the stimulation of competition among different players and market solutions. These instruments create broader financing opportunities for the banking sector, encourage innovation and improve the efficiency of market players. Mortgage bonds, which are reliable, have proven themselves and are already known to investors, will continue to play a prominent role in the domestic capital market; they represent a stable, transparent and prudent financing instrument on which it is worth building in the long term. However, diversifying market financing and using new structures that promote competition offers the opportunity to broaden the funding base, share risks, and strengthen the international integration of the Hungarian capital market as well.
The MNB decree is expected to be published in the Hungarian Official Gazette in the coming days.
Further information on the central bank’s macroprudential tools for mitigating liquidity and funding risks regarding the MFAR can be found here.
Magyar Nemzeti Bank