Impact of Lending Conditions and Interest Rates on the Hungarian Real Estate Market

The development of the Hungarian property market in 2025 is influenced not only by prices and demand but also strongly by lending conditions and the interest rate environment. Since mortgages are a crucial factor for most buyers, changes in financing options directly affect transaction volumes and price dynamics.

Current Mortgage Market Situation

At the end of 2024 and beginning of 2025, the National Bank gradually reduced the base rate, leading to a slight decrease in mortgage interest rates. However, current rates of around 6–7% remain significantly higher than the historically low levels of the past decade.

As a result:

Young first-time buyers struggle to access financing,

Monthly installments remain high, reducing the pool of potential buyers,

Many investors prefer cash purchases, using their liquidity to gain an advantage.

Demand and Buyer Behavior

Due to strict lending conditions, buyers are focusing more on smaller, lower-priced apartments. At the same time, the premium segment – central locations, new builds, and energy-efficient homes – continues to attract wealthier buyers and investors.

Government support schemes (such as CSOK Plusz) can help young families, but they apply only to a limited group of buyers.

Interest Rates and Their Effect on Prices

High interest rates: slow down transactions and weaken price growth in several segments.

Potential rate cuts: If inflation continues to ease and the central bank lowers rates further, demand could recover and prices may rise again.

In early 2025, it is already evident that investors and higher-income buyers dominate the market, while the share of mortgage-dependent buyers has decreased.

Outlook for 2025

Experts forecast that:

With gradual rate cuts, demand could pick up in the second half of the year,

Transaction volumes may increase by 10–15%,

Price growth will remain selective: properties in good locations and energy-efficient homes will gain in value, while outdated, renovation-needy apartments will struggle.

Conclusion

Lending conditions and interest rates remain a key driver of the Hungarian real estate market. While cash buyers and investors currently benefit from better bargaining opportunities, buyers relying on financing face challenges due to high monthly payments and strict bank requirements. The trajectory of interest rates in the coming months will be decisive – determining whether the market stagnates or regains momentum.