A housing regime unchanged: The rise and fall of foreign-currency loans in Hungary

Abstract

This paper analyzes the expansion and crisis of the foreign-currency (FX) loan market and responding mortgage-rescue programs in Hungary. We assess changes in the housing regime and illustrate the process through analyzing interactions between individual and institutional (state, financial institution, and municipality) strategies. We argue that the current, malformed housing regime has not changed significantly and remains vulnerable to similar events. This particular case offers insight into regional tendencies, while also explaining the reasons behind the escalation of the crisis in Hungary. We claim that the coping strategies and broader behavior of participants reinforced the disproportionate elements of the housing regime. Since 2015, housing policies have again relied on economic stabilization, now subsidized by the EU, that incentivize market solutions for private home ownership and disregard the experiences of past decades.