Almost two days have passed since the law that repeals state support for savings for housing was approved, so there is only one player left in the market that also offers new contracts, not only paying the old ones. Two years ago at the time we did not understand why Members were rushing, now we have a guess. It also turned out that the kiss gives the government more money than before for housing savings, but that amount is not for everyone and can be used for much less purpose.

But it is written in a strange way, it is as if they want to cut the savings of the house

– It was one of the first reactions in the editorial office a little over two years ago, on a Monday morning, when we began to review which bills would be introduced in the parliamentary session that would begin that afternoon. A few minutes later, when several people had read Erik Bánki’s proposal, we were convinced: we really were not wrong, we have to write a very quick article on how Fidesz would end state support for home savings. That afternoon, it was only possible to reach the housing savings administrators in line for several hours, the next day the law was voted, three days later, on October 18, 2018, it was no longer possible to sign a state aid contract, Erste, which is the penultimate of the market, will not enter into new contracts either.

Until then, savings for housing received 30 percent of the amount deposited, up to a maximum of HUF 72,000 per year of savings, as state support. This has not changed for previously concluded contracts, but for grants after the entry into force of the law, this support is no longer available. After the withdrawal of the state stake, the remaining service providers tried to respond to the change with new products, but concluded far fewer new contracts in 2019 and this year. In practice, this meant that the annual return fell from more than 10% to about 1-2%. Since then, the market has been moving towards a single player:

  • Almost one day, exactly one year after the withdrawal of state support, OTP Housing Savings announced that it would suspend the sale of its products. However, Sándor Csányi, president and CEO of OTP, said the day the state aid ceased that he saw no problem.
  • Erste took over Aegon’s home savings portfolio, which was the fourth player, in 2019, but it only lasted until October this year, with sales of home savings products suspended on October 31.
  • Thus, Fundamenta Housing Fund remained the only one in the market that still offers savings from savings funds for housing.

Fundamenta, which already managed more than half of the total deposit portfolio of the Hungarian housing savings banks of HUF 800,000 million, HUF 434,000 million, obtained an after-tax profit of HUF 6,220 million in 2017 in the last year before the change, and from HUF 7 billion in 2019. Profits increased above HUF. In addition to the rapid introduction of a new form of savings, this also required the company to move into new areas: In 2019, its executives announced that they would also try to sell government securities, solar panels and real estate.

In the fall of 2018, one of the most incomprehensible parts of the situation was, and the answer has not been clear since:

Why did you have this rate of seizures?

The proposal was presented on Monday, voted on Tuesday and signed by János Áder almost immediately. We’ve seen it before and after, with laws passed in parliament in days, but breaking home savings was perhaps not one of the most pressing problems in the country.

It may be worth looking for the answer there, said Mihály Varga a few weeks after the law was passed. The Finance Minister complained that “a decision was not made quickly enough”, since in the last three days at least 140,000 housing savings contracts had been signed, representing a tenth of the contract portfolio existing. In other words, legislators could rightly count on it: the longer they wait, the more people choose the old kind of home savings. Various politicians have suggested that there may have been a trick – we have heard of retroactive contracts – but abuse has not been proven in fact.

But how has access to housing changed since then?

Until the beginning of 2020, the construction industry was spinning at a tremendous rate in Hungary. On this basis, it may appear that the abolition of state support for savings for housing has not been a problem. But the bigger picture is more complicated: in addition to many living on the family housing allowance (chok), they have now bought many apartments because the 5 percent housing tax ran out at the end of 2019; however, it has since been announced that it will be returned next year. In other words, the abolition of housing savings support did nothing to improve the situation.

One of the most important parts of the reasoning was that there would be no less subsidy, but the government would distribute the money through the check. This has been the case, as the Habitat for Humanity analysis showed, since 2019 more than HUF 100 billion have been spent a year in support of chocolate, which is far more than the 70 billion guilders donated to saving living place.

However, there is a big problem with this: chocolate is much more selective between people. Savings for housing could not only be used by families, there were no expectations about the number of children, nor a penalty if not enough children were born, and it could be used for various purposes. In addition, the government now provides 11 times more untargeted support than socially targeted support.

In Hungarian, anyone who has had money until now can buy an apartment much easier than before, but the work of others has become more difficult.

They also explained the transformation of the system by buying far fewer houses with home savings than with chocolate. Strictly speaking, this is a true statement, but it appears to be a minor slip when we add that money saved in home savings could also be included in the prepayment of a home loan, could also be spent on home renovations, and could be used by condos. It is true that since mid-2019, chocolate can already be used to buy a used apartment and next year apartments bought with chocolate will no longer have to pay a fee. The state also provides loan payment assistance, for which you can take out the Baby Waiting loan without interest.

Meanwhile, Magyar Államampapír Plusz has also appeared on the market, offering an average annual return of almost 5 percent. This is much better than home savings, but half of what home savings could offer with state support. Housing savings were already buried when the housing lottery came out in 2016, but it didn’t turn out to be the easiest way to get home in the end.

In recent years, there has been another very important change in the regulation of home purchases: much stricter borrowing conditions have been introduced than before. Those involved in housing policy almost unanimously agree that this was the right decision by the central bank and the government, but it also had an unwanted side effect. Those who do not obtain a mortgage loan go to a personal loan, so now we are there that 76 percent of delinquent personal loans are already disbursed in 2016 or later, and in a few years it turned out that whoever took it out does not know for pay back.



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