Romanian Govt To Set Max Rates, Fees In "First House" Program

The Romanian government will set maximum interest rates and fees for banks to take part in the "First House" program, and the client who buys a dwelling that costs more than EUR60,000 will have to pay the difference out of its own funds, banking sources told MEDIAFAX Tuesday.

For properties that cost less than EUR60,000, the buyer would have to provide a down-payment of 5% and the interest for three months, the quoted sources added.
The interest rate for three months will be added to the advance so that bank will not be forced to book provisions before receiving the state guarantee, 90 days after registering the payment delays.
 
The methodological norms of the program will set for banks criteria like maximum limits for interests and fees.
 
More than 20 banks filed indicative offers on their effective annual interest rate, or AER, for the "First House" program, varying between 5.5% and 14% for euro-denominated loans, and between 13% and 23% for Romanian leu-denominated loans, government sources told MEDIAFAX last week.
 
The Romanian Government announced mid May 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 haven't previously taken a mortgage loan.
 
The program will be operational as of June 20, Prime Minister Emil Boc said last week.

Mediafax