The government has reached a new target group with the workers’ loan – young career starters and those with lower qualifications are also entering the credit market

Interest-free, free-use loan – supported even without having children

The worker’s loan can be used for a maximum of 4 million forints, for a maximum term of 10 years, is free-use and interest-free. One of the most important attractions of the scheme is that – unlike the baby loan – it does not require having children. However, if the female debtor does start a family, half of the debt is forgiven after the second child and the full amount after the third, while repayment can be suspended for 2 years when the first two children arrive.

The typical monthly installment of the scheme is 35 thousand forints, which means a low income-related repayment – ​​according to the Magyar Nemzeti Bank, the median value of the JTM (income-related installment indicator) is only 15 percent.

Tens of thousands of young people have entered the credit market

According to the central bank’s initial data, banks had concluded 20 thousand contracts by the end of April, worth a total of 77 billion forints. The average loan amount is 3.9 million forints, which indicates that the majority is taking advantage of the maximum limit. February was the strongest month, with 37% of contracts concluded during this period. By the end of the first half of the year, there could be between 26,000 and 30,000 borrowers and a loan amount of around HUF 100 billion on the market.

This represents a lower placement compared to the launch of the baby loan in 2019, but the worker’s loan could bring in one and a half times the baby loan volume in 2024. It reached a 7.1% share among new retail loans in the first four months of the year.

Who are the typical applicants for the worker’s loan?

According to the central bank survey, people living in villages and residents of Jász-Nagykun-Szolnok, Pest, Komárom-Esztergom and Szabolcs-Szatmár-Bereg counties were overrepresented among borrowers. 15% of borrowers have a primary education – this is a much higher rate than the 11% measured in the entire retail loan market last year.

The gender ratio has also shifted: 65% are men, so debt relief linked to childbirth may have only a limited budgetary impact. 50% of loan debtors still live with their birth family, 13% are married, and 9% already have children.

The majority of young people (83%) had not planned to move abroad in the first place, and 11% gave up on this specifically because of the loan – all of which may contribute to keeping the domestic workforce at home. According to banks, the product is “heavy”: the more aware clientele at the beginning of the year has already taken advantage of the opportunity, while fresh career starters tend to arrive at the end of the school year.