Romania's Gov May Raise Guarantee Limit For 1st House Purchase - PM

The Romanian government does not rule out increasing the current EUR60,000 guarantee threshold for buying the first dwelling and the budget alloted for such guarantees if the program imposes another procedure, the Prime Minister Emil Boc said Monday.

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“We begin with EUR60,000 ... but we are flexible in increasing the governmental guarantee fund by another EUR100 million to continue granting guarantees to banks so that citizens can buy dwellings,” Boc said.

Boc said he thinks the banks would agree with decreasing the downpayment requested from clients for “first house” loans and with cutting the interest rates as the loans risk will be shared with the state.

If clients do not reimburse their loans, houses will become property of the state to be valued on the market, Boc said.

The government announced Wednesday that the loans contracted for the purchase of the first home would be guaranteed by the state, within the maximum limit of EUR60,000, with the entire financing granted to this program reaching EUR1 billion.

The guarantee will be available for people buying their first home and who have not taken any mortgage loan before.

Thursday, Boc said that the government’s program meant to guarantee loans contracted for the purchase of the first home would include only banks that accept a downpayment of maximum 5% of the loan and charge the lowest interest rates.

According to the representatives of real estate agencies, developers and construction companies, the state guarantee of the loans for buying the first home may stimulate the real estate and constructions market, but the result depends on how the program will be applied and on banks’ reactions.

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