Mortgaged houses can be bought within the First Home

Publish date: 22-07-2009
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Banks which did not launch the "First Home" program so far, although they applied for it and were supposed to provide more than half of the funds guaranteed within the program, agreed with the Government yesterday that their clients can also purchase new apartments that were mortgaged by developers.

This allows banks to promote the projects of developers which they have financed and to resume the refinancing cycle for the construction of new homes. Through the "First Home" program, part of the Government's anti-crisis program, people who have never owned a home can buy one with loans with lower down payment (5 percent, compared to 15-25 percent otherwise) and better interest rates.

The state guarantees loans up to €60,000 per housing unit and totaling €1 billion. The local banking market leader, Banca Comerciala Romana (BCR), which committed to grant one third of the guaranteed funds, namely €308 million, announced it would start granting "First Home" loans in the coming days. The lender's management made this decision after a meeting with Prime Minister Emil Boc.

Managers of a further six banks - UniCredit Tiriac, OTP Bank, Bancpost, Raiffeisen, and Credit Europe Bank - also attended the meeting. "We had a very productive meeting. All parties had the chance to say their mind and clarify all aspects. There are still details to set up, but I am sure that it is a matter of days until the «First Home» program is fully operational," BCR Retail Vice-president, Martin Skopek, said.

Also yesterday, ING Bank, which had applied for the program, announced its official exit from the "First Home," on grounds that the guarantee proceedings lead to extra costs that are not in accordance with the lender's distribution model.

Business Standard

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