UPDATE 2-Hungary to provide subsidised loans for first-time home buyers, PM says

Hungary will provide subsidised loans with a 3% interest rate for all first-time home buyers, regardless of age or location, Prime Minister Viktor Orban said as he gears up for a tightly-contested election due in less than a year.

The scheme was announced as the nationalist Orban's Fidesz party prepares for next year's vote while also facing unusually strong economic challenges, with the economy barely growing. Orban said anyone looking to buy their first house or apartment will be able to borrow up to 50 million forints ($147,067.47) at 3% interest for a maximum term of 25 years. The scheme will require a minimum of 10% down payment on the property.

"The market currently has high interest rates of 7-8%, and this is less than half of that," Orban said in a video posted on his Facebook page. Orban also said that the government plans to launch a scheme in September for those who want to renovate their homes.

The government is targeting 2.5% growth this year, although a state secretary at the Economy Ministry said last month that projection was under review. Most economists say that number is far too optimistic, while the Central Bank projects economic growth at a mere 0.8% this year. However, some investors are concerned that the weak economy could trigger the kind of fiscal largesse that helped Orban get re-elected in 2022.

Orban said in February that the government will offer free grants to hundreds of thousands of pensioners in rural areas to renovate their homes, targeting a voter group that has traditionally supported his party. ($1 = 339.9800 forints)

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