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Aug 13, 2020 - Zoltán Kovács

The success of Hungary’s family policy: 2020 has been our best year to date

The Family Protection Action Plan was launched by the Hungarian government in February 2019 and has since grown into an impressive success story. Here’s where we’re standing now.

Announced by Prime Minister Viktor Orbán in his State of the Nation address last year, the Hungarian Government’s Family Protection Action Plan aims to create opportunities in a country where young couples have expressed a desire to have more children and to build a support system by devoting 4.8 percent of GDP to supporting families and encouraging childbirth.

With this plan, Hungary boasts one of the most generous family-support systems in Europe, spending almost twice as much on family support as the OECD average. The new family policy, which came into force on July 1, 2019, includes the following measures:

1. A preferential loan offered to every couple where the woman is under the age of 40 when they first get married (“baby-expecting loan”).

2. An extended loan program to support home purchases (also known as CSOK); families can use the loan for the purchase of a new or pre-owned home.

3. A HUF 2.5 million subsidy for the purchase of a car for large families.

4. A loan repayment of up to HUF 1 million for mortgage loans taken out by families with two or more children.

5. A lifetime exemption from personal income tax for women who have raised at least four children from January 1, 2020.

6. New spaces for 21,000 children in nursery schools in the next three years.

7. Subsidized parental leave for grandparents from January 1, 2020.

With over 100,000 applications for the baby-expecting loan so far, the Hungarian Government’s most popular family policy measure has arrived at an important milestone. According to the latest data from the Ministry of Human Capacities and the office of Katalin Novák, State Secretary for Family and Youth Affairs, since July 1, 2019, banks have paid out a total of HUF 784 billion (EUR 2.26 bn) worth of baby-expecting loans to Hungarian families. Most families have taken out the maximum of HUF 10 million for this special loan, which, besides turning interest-free after the first child is born, triggers a 30 percent write-off after the second child. Ultimately, families with three children born after taking on the loan will be relieved of the remainder of their debt.

Here’s a simple fact that perfectly illustrates the importance of baby-expecting loans and explains why it has become a force to be reckoned with: In the second half of 2019, banks have granted more money in baby-expecting loans than they did in housing loans.

Meanwhile, more than 145,000 families, nearly 600,000 people, have applied for the CSOK home subsidy since its introduction in 2015 and have received HUF 455 billion (EUR 1.31 bn) of support.

At the same time, stepping up financial support and adopting a series of massively pro-family policies have led to a record number of marriages in Hungary. Based on the most recent statistics from the first three months of this year, with 12,271 marriages in the January-March period, the number of weddings has more than doubled compared to the same period last year. Put another way, the number of marriages for this January, February and March was up by 97, 131 and 77 percent, respectively, compared to a year earlier.

This all goes to prove that Hungary’s groundbreaking family policy is working and the Hungarian Government will not stop until it has altered the country’s demographic course for the better.