Hungary's Mortgage Cap Extension: Shielding Families Amid Economic Challenges

Hungary's government is extending the interest rate cap on retail mortgages until mid-2025, initially imposed to protect households from surging inflation. Prime Minister Viktor Orban's administration aims to prevent households from paying more despite the recession and high inflation, shifting the financial burden to banks.

The Hungarian government has announced an extension of its interest rate cap on retail mortgages by another six months, stretching into mid-2025. This decision is part of the government's ongoing efforts to shield households from the burden of rising inflation, which hit 25% in January this year, the highest in the European Union.

In October, Hungary's annual inflation rate stood at 3.2%. Gergely Gulyas, the chief of staff to Prime Minister Viktor Orban, indicated that the cap has significantly reduced financial stress on families. “Without this measure, families would face massive costs, absorbed instead by the banking sector,” Gulyas stated during a recent press briefing.

Amidst a technical recession following a 0.7% economic contraction last quarter, Economy Minister Marton Nagy acknowledged that while the cap impacts consumption recovery negatively, it remains necessary. Orban's government continues to juggle economic revival with shielding citizens from financial hardship.

(With inputs from agencies.)