BUDAPEST (Reuters) – Hungary’s central bank will launch a program to buy green mortgage bonds and cheap green loans as part of measures to support environmental sustainability, the National Bank of Hungary (NBH) said on Tuesday .
“In accordance with the strategy, the Monetary Council decided to launch two new programs to promote and stimulate green mortgages,” the bank said in a statement.
“The strategic objective of the Green Mortgage Bond Purchase Program is to contribute to the development of the national green mortgage bond market through targeted purchases and, through this, to encourage green mortgage lending activities.
The bank set an initial target volume of 200 billion forints ($ 670 million) for the bond program, and said it would review the program once it is reached.
Under the second program, the central bank will launch cheap loans for banks in October to encourage green mortgages, with a total limit of 200 billion forints. The central bank will provide financing to banks at 0% interest, which will be loaned to residential customers at a maximum fixed interest rate of 2.5%.
“Under this program, loans of up to HUF 70 million and with a term of up to 25 years can be granted for the construction or purchase of new, energy-efficient residential real estate,” said the NBH.
The BNH raised its key rate by 30 basis points to 0.9% last month to counter growing inflation risks.
Reiterating his previous comments, Deputy Governor Barnabas Virag said in an online briefing on the Green Agenda that the bank will act decisively and in the fastest possible way to counter inflation risks.
He also reiterated that the rate hike cycle will continue for as long as inflation risks warrant and that the July rate decision will be critical when it comes to the size of future rate hikes.
(Reporting by Krisztina Than; editing by David Evans)
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