This year appears to be the best since the launch of the scheme, according to the data supplied by SME Loan Guarantee Fund to ZF.
The number of real estate loans stands at more than 300,000 worth a total of RON48 billion. This means the First Home accounts for half of the home buying loans in Romania.
Since the government takes the risk for half of the amount borrowed via the First Home scheme, one quarter of the RON48 billion is government-secured. Moreover, if Romania were to go through another crisis like the one in 2009-2010, with homes foreclosed by banks due to the homeowners’ failure to pay their loan instalments on time, banks will turn to the government for one quarter of the homes paid for with loans.
Banks granted EUR735 milion worth of First Home loans in the first seven months of this year alone or a monthly average of EUR105 million and demand remains high despite more and more standard loans offers, which come with similar interest rates. The main competitive edge of First Home is the required down payment, only 5%, but that is slowly eroding, as well.
“The supply-demand intersection segment on the real estate market is increasing, there are offers whose first option are new buildings, which means the down payment is no longer an advantage,” says Anca Bidian, chief executive officer of loan broker Kiwi Finance.
“When it comes to choosing between a First Home loan with its restrictions and a standard loan, customers go for the second option.”
Banks might grant about 37,000 loans this year, the most since the start of the program, worth EUR1.3 billion, considering the monthly average in the first seven months. The average First Home loan stood at EUR38,000 (RON167,000) in the first seven months, according to ZF calculations.
BCR and BRD, the two largest local banks have granted 80,000 First Home loans worth almost RON14 billion since 2009, more than half of the total such loans, according the data they supplied to ZF.
(English version by Loredana Fratila-Cristescu)