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Central Governor György Matolcsy has been dissatisfied with the government’s housing policy for some time, has expressed this several times, but now, instead of criticizing, he has put forward a proposal on how to speed up the construction of new houses. In his article published on Növekedés.hu on Monday, he came up with the idea of the “New Housing Program”, in which people could take out a 0 percent loan for the construction of new houses directly from the MNB.
According to Matolcsy, the problem in the housing market is that, although there is a great demand for new housing, a sufficiently strong supply is not reached. This is compounded by the fact that, according to the central bank governor, it is a wrong decision for the government to increase VAT on housing construction. “In general, in the current system, housing policy produces inflation and does not create a new home,” he writes. The solution would be a program that the central bank would launch, of course, only after the government agrees.
As part of this, the MNB would provide a 0 percent loan with a ten-year maturity to those who build or purchase new green homes. The source could be provided in half by the central bank and the borrower, even supplemented by other bank loans, but the central bank portion could be borrowed with market insurance rather than a mortgage.
According to Matolcsy, a program of this type could win between 30 and 40 thousand new homes and produce the demographic change that the government expects, and it would produce GDP growth of 1 percent and create between 40 and 50 thousand new jobs.
Portfolio.hu has already started to criticize Matolcsy’s idea, mainly because it would largely ignore commercial banks, while banks could introduce these new loan schemes as well. For this reason, it is feared that the loans will not work efficiently from a non-market perspective. According to anonymous critics, the idea of a central bank president today would replace well-functioning banking activities without solving market problems.
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