CEE’s leading lender OTP Bank became the second lender in Hungary to launch a market-based green home loan for the purchase of energy-efficient homes, but is also available for upgrade of existing homes, the bank said on July 3.

K&H, the subsidiary of Belgian-based KBC, rolled out its product in August 2022.

The loans by OTP, with a HUF130mn (€348,000) upper cap, can be used to buy a property with a 'BB' energy class, with an annual energy consumption of no more than 80 kWh per m2.

For upgrades, the same rules apply, but the loan is available also if the investment leads to a 30% reduction in primary energy use. The loan’s maturity runs from 11 to 30 years. Customers have 24 months to meet the energy requirements and can request a deferment if necessary, OTP said.

In the first nine months of 2022, the share of certificates issued with a “BB” rating or higher was 10.8%, which went up to 18.8% in the fourth quarter, as demand for energy-efficient homes surged after the overhaul of energy subsidies.

Overall, only a fraction of Hungary’s 4mn large housing stock meet the most stringent energy efficiency criteria.

The National Bank phased out its green mortgage loan scheme last year, which offered favourable rates at a time when lending rates began to climb as the MNB began a monetary tightening cycle.

The HUF300bn lending scheme with a capped 2.5% interest rate was quickly depleted in Q1 2022 as market-based mortgage loan rates surged from 3-4% in 2021 to over 10% by the end of Q3 2022.

At the end of 2022, the share of subsidised mortgage loans was 50%.
Higher borrowing costs have set back new home loan outlays by around the same rate so far this year, according to data from the MNB.