Improving Access to Credit for First-Time Home Buyers under Borrower-Based Measures

Gabriella Grosz (), Gabor Izsak (), Alexandr Maxim Palicz () and Katinka Szasz ()
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Gabriella Grosz: Magyar Nemzeti Bank
Gabor Izsak: Magyar Nemzeti Bank
Alexandr Maxim Palicz: Magyar Nemzeti Bank
Katinka Szasz: Magyar Nemzeti Bank

Financial and Economic Review, 2023, vol. 22, issue 2, 25-53

Abstract: As a result of the dynamic rise in real estate prices in recent years, house prices, and therefore the minimum down payment required to obtain a mortgage, more than tripled by 2022 compared to 2014. This led to a deterioration of access to borrowing opportunities typically for young first-time home buyers aged 35 or younger, especially among clients who are not eligible for family support schemes. In this paper, we provide a detailed overview of the potential side effects of the borrower-based measure framework on first-time home buyers. Relative to their credit risk, these clients may be more severely affected by borrower-based measures, generating negative second-round effects. Therefore, in their case preferential limits may be applied, in line with international practice, notably on the level of down payment. However, when making such a decision, it is important to take into account the development of risks in the housing and credit markets and the macroeconomic environment.

Keywords: financial stability; real estate overheatedness; excessive lending; macroprudential policy; borrower-based measures; loan-to-value ratio; debt-service-to-income ratio; first-time home buyer (search for similar items in EconPapers)
JEL-codes: D14 E32 E51 E58 G21 R31 (search for similar items in EconPapers)
Date: 2023
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