Interest Rate In “First House" Should Be At Least 1 Pps Above Romanian Treasuries' Yield

The interest rate for the "First House" program should be as low as possible so that the clients qualify for the loans, but it should be at least one percentage point above the interest rate the Romanian state pays, Raiffeisen Bank Romania’s president Steven van Groningen said.

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"The key of the talks is the level of the interest rate. At high interests, few people would qualify. (...) A reasonable interest rate would be at 1% over the one the state pays in turn," van Groningen said Wednesday.

He said the Romanian banks have no influence in setting the interest rates on the international markets, while at the levels the state borrows money from the local and foreign markets there should be added the lenders' costs.

The Finance Ministry currently pays interest rates slightly above 11% in state tresury auctions, and Romania's credit default swap (CDS) on the foreign markets sets to around 300 basis points, which are added to the EURIBOR rate.

Wednesday, president Traian Basescu holds talks with the representatives of the central bank, Romanian Banks’ Association and the most important ten banks in the country on issues including, among others, the “First House” program.

The Romanian Government announced two weeks ago a program to guarantee the loans contracted for the purchase of the first home, within the maximum limit of EUR60,000, with the entire financing granted to this program reaching EUR1 billion.

The guarantee will be granted to the persons buying their first dwelling who did not previously benefit from a mortgage loan.

The selection criteria of Romania’s banks that will further take part in the government’s program meant to guarantee loans contracted for the purchase of the first house will include charge-free early loan repayment, a down payment of maximum 5% of the loan value, and dwelling’s evaluation procedures, Prime Minister Emil Boc said.

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