Baby loans had their weakest year yet

The baby loan could have its weakest year so far in 2025: in light of the first eleven months, 210.1 billion forints of new contracts, it is almost certain that the 2024 new placement of 259.2 billion could not be achieved last year either – draws attention to Mihály Barát, financial journalist at BiztosDöntés.hu.

In the scheme designed to support young couples planning to have children, the amount of contracts fell by 8.5 percent and the number by 8.8 percent compared to the first eleven months of 2024: the latter means that by the end of November last year, banks had concluded a total of less than 19.3 thousand contracts, which was also unprecedented.

The baby loan, available since July 2019, reached its peak the year after its introduction: then, 63.6 thousand contracts were signed, worth 618.4 billion forints. Since then, however, interest has been waning almost continuously, only the upcoming legislative changes – and the possibility of phasing out the scheme – have brought temporary positive swings of a greater or lesser extent. The appearance of the Otthon Start loan has not yet brought a breakthrough in the baby-sitting sector: although the two schemes can be combined with each other, according to the statistics of the Hungarian National Bank, this opportunity has not been used much so far.

Following the gradually decreasing interest, the importance of the baby-sitting sector is also fading in the retail credit market: while 2024. In the first eleven months of 2019, this scheme accounted for nearly a fifth of all consumer loan contracts, while in the same period last year its share of new loans had fallen to 13 percent. Within the entire retail loan portfolio, the weight of baby loans is still very significant, at 17.9 percent, but here too a gradual decrease can be observed: roughly two years ago its share was over 20 percent.

Interest is decreasing despite the fact that the baby loan is one of the most favorable subsidized schemes available on the retail market. The loan, with a maximum amount of 11 million forints, is freely usable and has a term of 20 years and becomes permanently interest-free upon the arrival of the first child, 30 percent of the outstanding debt is waived upon the arrival of the second child, while after the third child, the state assumes the entire outstanding (not overdue) debt.

“There are two important conditions when applying for a baby loan, which significantly filter out potential applicants: one is that only married couples can apply for the scheme, and the other is that the wife must be under 35 years old at the time of application. In addition, banks examine the creditworthiness of applicants according to normal conditions, which is also a significant filter. It should not be forgotten that banks have concluded more than 285 thousand contracts since the launch of the baby loan, meaning that there are fewer and fewer people who have not yet applied for the scheme and who fit within the given framework,”

reminds the financial journalist of BiztosDöntés.hu.