National Bank Continues to Support 'Green' Mortgages

The National Bank of Hungary (MNB) extended its Green Preferential Capital Requirement Program that does not only recognize discounts for interest rates but also for fees in the future, which provides incentives to introduce additional mortgage loans for energy efficiency purposes.

The program is extended by one year, until the end of 2024. An MNB statement says more flexible conditions may counteract the temporary decline in credit demand resulting from the pandemic situation.

The Program was developed as the risks of green housing loans are lower relative to those of other similar constructions. Therefore, the MNB has prescribed lower capital requirements for banks since the beginning of 2020, if their new, eligible green housing loans, offered while the Program runs, are priced no less than 0.3 percent lower. It is well noted that originally, MNB had announced this measure in December 2019 before the emergency situation, caused by the pandemic, emerged.

A key facilitation measure in the Program is that the MNB now also acknowledges deductions offered for fees linked to loans, in addition to the current lower interest rates under the Program. To allow consumers, opting for green loans, to continue to access loans with favorable conditions to achieve their energy efficiency goals, the credit institution must offer these loans with lower interest rates and/or fees resulting in at least 0.3 percentage points discount relative to the Annual Percentage Rate of Charge (APRC).

MNB adds that since coronavirus pandemic also poses a great challenge, the financial sector must face, and the uncertainty causes many consumers to delay their planned borrowing and investment. Therefore, in the dimension of ecological long-term sustainable convergence, MNB decided to extend the Program and make pricing conditions more flexible, taking account of its goals set under its Green Program.