Bankers Seek Customers For "First Home" Programme

Ana Săbiescu

Commercial banks have started signing guarantee agreements with the National Credit Guarantee Funds in order to start the State-driven First Home programme designed to help individuals buy their first home with a State guarantee for up to 60,000 EUR per person. The current intention is to start to programme before the planned deadline of 15 July, according to Aurel Saramet, President of the National Credit Guarantee Fund for Small- and Medium-Sized Enterprises (FNGCIMM).

"We have organized ourselves well and banks can now come to sign the guarantee agreements. The next day after signature, they can start disbursing mortgage loans under the First Home programme," Saramet told BURSA. Banca Romana pentru Dezvoltare (BRD) - Groupe Societe Generale was the first to sign and meetings with other banks have already been scheduled. A total of 20 banks placed bids to join the programme and will sign the guarantee agreements until 15 July 2009.

The banks are hoping to disburse a significant number of mortgage loans under the programme, following a very slow first half of the year and a worrisome surge in the volume of overdue loans and related provisions. As the State is willing to issue guarantees for the mortgage loans given under the First Home programme, banks do not need to worry about any of such loans turning bad.

Interestingly, bankers oversubscribed the Government"s offer for the First Home programme by nearly 50%, the overall value of the funds allocated for this purpose reaching 1.45 billion EUR, compared to the 1 billion EUR earmarked by the Government for the guarantee fund. Consequently, the Government only accepted a percentage of the banks" bids in order to maintain the 1 billion EUR threshold.

The banks" rush to start the programme could be interpreted as a wish to give loans to young families seeking to buy their first home. Although banks were reticent to place bids when the programme started as the State imposed low interest rates, now the idea that "something is better than nothing" seems to have gained ground. The primary eligibility criteria for the First Home programme are not owning a home already and not having a mortgage loan in progress.