Nobody Knows Exactly When First Home Will Resume

05.17.2011 ZF English

The time when the "First Home" scheme will be resumed, with the state only guaranteeing for 50% of the amount granted as part of the mortgage loan scheme, is still unknown even after the Finance Ministry last Friday organized a meeting attended by bankers, representatives of the central bank and of the SME Loan Guarantee Fund, the institution that grants the guarantees.

Following the talks, the ball is now in the bankers' court. Each bank interested in the scheme needs to revise its lending terms in such a way as to persuade the Romanian central bank (BNR) that First Home loans will not be problematic in terms of the risk taken on, considering that the state guarantee will only cover half the amount granted.

"This is about interpretations, and a meeting was held to make sure everybody understands the same thing. There are technical issues that have to do with the banks, but this is not something that can be held against them, and the banks reached common ground.

For smaller banks there needs to be a certain ratio between mortgage loans and capital, this has to do with solvency," Aurel Saramet, general manager of the fund, told ZF.

He could not provide an estimate as to when the scheme should be resumed, saying this answer should come from the bankers.

The problems are that the Government failed to allocate a new guarantee cap for the new edition of the scheme, asking bankers to agree to a cut in half of guarantees for already granted loans.

The guarantees freed up as a result would be used for the sale of new "First Home" loans, with the main lending terms remaining the same for clients - the only 5% down payment and the cost caps. But this means banks need to revise their internal lending terms and get the central bank's approval.