When interest rates replace support: The implications of the euro for housing policy and fiscal policy

Becsei, András and Incze, Zsombor (2026) When interest rates replace support: The implications of the euro for housing policy and fiscal policy. ECONOMY AND FINANCE: ENGLISH-LANGUAGE EDITION OF GAZDASÁG ÉS PÉNZÜGY, 13 (2). pp. 119-146. ISSN 2415-9379

Preview

Text 119-146Becsei_InczeEF_2602.pdf - Published Version Download (308kB) | Preview

Abstract

In this paper, we examine whether the adoption of the euro can institutionally replace budget-funded housing subsidies in Hungary by creating a lower and more stable interest rate environment. By considering more than 130 years of institutional history in housing finance in Hungary, we demonstrate that the marketbased availability of long-term, low-interest-rate funding is exceptional and has typically been linked to external monetary conditions (such as the gold standard) or extensive fiscal subsidies. By comparing data from euro area Member States in the region (Slovakia, Slovenia, Croatia) and Hungary, we use a difference-indifferences (DiD) analysis to examine how the interest rate offered by the Otthon Start Program (Home Start Program), introduced in 2025, compares to euro area mortgage rates. Our results suggest that the interest rate implied by the program does not differ significantly, in a statistical sense, from regional euro area interest rates. Therefore, our research shows that the adoption of the euro in Hungary is not merely a monetary policy issue in the strict sense, but can also be viewed as an independent housing policy tool, which can thus help mitigate cyclical and fiscal risks related to housing and its affordability.

Actions (login required)

View Item