5 April 2022
At its meeting today, the Monetary Council decided to tighten certain requirements applicable to eligible homes in the FGS Green Home Programme, while increasing the total amount for the programme by HUF 100 billion. In order to support the wider use of higher quality green mortgage bonds, the Council decided to tighten the terms on the Green Mortgage Bond Purchase Programme as well. The MNB attaches great importance to promoting green issues in the housing loan market without jeopardising its primary objective of achieving and maintaining price stability in line with its statutory mandate. The Bank’s programmes aimed at supporting environmental sustainability do not affect the tightening stance of monetary policy.
According to the Magyar Nemzeti Bank’s Green Monetary Policy Toolkit Strategy, the green transition of the economy is a prerequisite for Hungary’s sustainable convergence. The FGS Green Home Programme (GHP) and the Green Mortgage Bond Purchase Programme, both launched in 2021 within the framework of the strategy, are designed to support the development of the green housing loan market and to promote environmental sustainability awareness in the domestic housing market.
More than HUF 135 billion in loan agreements have been concluded since the launch of the FGS Green Home Programme in October 2021. Meanwhile, the volume of loan applications submitted to banks exhausted the total amount of HUF 200 billion available under the Programme. Therefore, the Hungarian Banking Association requested the MNB to continue the GHP. In view of the strong demand for Green Home Loans and environmental sustainability issues, the Monetary Council has decided to raise the overall amount of the Programme by HUF 100 billion. At the same time, the energy performance requirements applicable to properties eligible for funding have been tightened in order to ensure that the Programme encourages the purchase and construction of even greener flats and houses. While continuing to require a ‘BB’ energy efficiency rating, the upper limit for the primary energy consumption of homes has been lowered from 90 kWh/m2/year to 80 kWh/m2/year. The Programme has provided funding for the construction of several thousand new homes in the period since its launch and will contribute to the expansion of the green property supply over the longer term.
Following the review of the Green Mortgage Bond Purchase Programme, the MNB decided to introduce tighter programme requirements. The primary objective of the Green Mortgage Bond Purchase Programme was to create a domestic green mortgage bond market and to implement the best international practices. The initial objectives set at the start of the Programme have been met and the foundations for the new market segment in Hungary have been laid. The Bank’s next objective is to encourage the issuance of higher quality green mortgage bonds by tightening the programme requirements. The modifications entering to force until 1 July 2022, will contribute to promoting best market practices, facilitating the wider use of higher-quality green mortgage bonds and boosting international investor confidence. The MNB will conduct a consultation on the development of the details to the modifications with the domestic mortgage banks involved. Until the modifications take effect, the MNB will suspend purchases of mortgage bonds issued under the current conditions, with the only exception being the purchases of bond issuances already under way.
The primary objective of the Magyar Nemzeti Bank is to achieve and maintain price stability. Without prejudice to its primary objective, the Bank preserves financial stability and supports the Government’s economic policy as well as its policy on environmental sustainability. In the Monetary Council’s assessment, maintaining tighter monetary conditions for a longer period is warranted to manage increasing second-round inflation risks. The above two Programmes will contribute to achieving the Bank’s goals related to environmental sustainability without prejudice to its primary objective. The Bank’s targeted programmes supporting sustainability do not imply a change in the tightening stance of monetary policy.