Orbán Government Unveils New Home Subsidies for Public Workers

Hungarian Prime Minister Viktor Orbán has announced a new home subsidy plan targeting public sector employees as he gears up for a closely-fought 2026 election.

The new measure will make doctors, nurses, teachers, and soldiers eligible for an annual home subsidy of HUF 1 million ( USD 2,870). These funds can be used either for existing mortgage payments or as a down payment on a new home, according to the Prime Minister.

The announcement follows a series of other spending initiatives, including a massive credit program in July that will provide up to USD 443 million per year in interest rate subsidies for first-time home buyers. Under this scheme, first-home buyers can borrow up to HUF 50 million (USD 147,558) at a fixed 3% interest rate for up to 25 years, with a minimum 10% down payment.

The escalating spending comes as Orbán faces his toughest political challenge in over a decade. A recent surge in support for opposition leader Péter Magyar’s Tisza party has put it ahead in most opinion polls, fueled by a cost-of-living crisis and allegations of government corruption.

The government maintains that the new home loan scheme will not significantly impact this year's deficit, but costs are projected to rise in the coming years. Gergely Gulyás, an aide to Orbán, told a media briefing that the program could cost between HUF 50 billion and HUF 150 billion (USD 148 million to USD 443 million) annually by 2027-2029, depending on the number of applicants.

These new measures, along with a raft of other benefits like pre-election income tax cuts and expanded lifetime personal income tax exemptions for mothers, are pushing the total cost of Orbán's family policies to a projected HUF 4.8 trillion (USD 14.2 billion) next year, representing about 5% of Hungary's total economic output.

Hungary's government revised its borrowing plan last month to help fund this increased pre-election spending. The country's economic backdrop remains challenging, with economic growth for this year significantly undershooting original forecasts, forcing the cabinet to slash its projection to 1% from an initial 3.4%. Meanwhile, the central bank has maintained its base rate at a joint-EU-highest 6.5% and has ruled out future cuts, as inflation continues to exceed its 2% to 4% tolerance band.

According to Economy Minister Márton Nagy, the government remains committed to meeting its revised budget deficit target of 4.1% of economic output this year despite the sluggish growth and rising spending. Fiscal discipline is seen as crucial for Hungary's credit rating, as S&P Global Ratings, which currently rates the country at the lowest investment grade with a negative outlook, may consider a downgrade to junk status in the coming months.

The political stakes are high for Orbán. He had reportedly hoped a strong economic rebound would pave the way for another election victory, but the sluggish economy and rising opposition have complicated his path to securing another term in the April vote.