BUDAPEST (Reuters) -Hungary's central bank will launch a green mortgage bond buying programme and cheap green loans as part of measures to support environmental sustainability, the National Bank of Hungary (NBH) said on Tuesday.
"In line with the strategy, the Monetary Council has decided to launch two new programmes to promote and boost green mortgage lending," the bank said in a statement.
"The strategic goal of the Green Mortgage Bond Purchase Programme is to contribute to the development of the domestic green mortgage bond market through targeted purchases and, through this, encourage green mortgage loan activities."
The bank set an initial target volume of 200 billion forints ($670 million) for the bond programme, and said it would review the scheme when this has been reached.
Under the second scheme, the central bank will launch cheap loans for banks in October to encourage green mortgage lending, with a total limit of 200 billion forints. The central bank will provide financing for banks at 0% interest, which will be lent to residential customers at a maximum 2.5% fixed interest rate.
"Under the scheme, loans of up to HUF 70 million and a maximum term of 25 years can be granted for constructions or purchases of new, highly energy-efficient residential real estates," the NBH said.
The NBH hiked its benchmark base rate by 30 basis points to 0.9% last month to counter mounting inflation risks.
Reiterating his earlier comments, Deputy Governor Barnabas Virag told an online briefing on the green programme that the bank would act decisively and the fastest way possible to counter inflation risks.
He also reiterated the rate hike cycle would continue as long as justified by inflation risks and the July rate decision would be crucial with respect to the size of future rate increases.
($1 = 298.5700 forints)