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Romanian Govt Sets 5% Downpayment, Limited Interest Rates For “First Home” Program

People contracting loans via the “First Home” program will pay either a 5% downpayment for a house that costs maximum EUR60,000, or EUR3,000 plus the difference of the purchase price, according to the methodological norms enforcing the program, which were adopted in the government meeting Sunday.
Romanian Govt Sets 5% Downpayment, Limited Interest Rates For “First Home” Program
14 iun. 2009, 16:15, English

Thus, to buy a home via the “First Home” program, interested people must pay a 5% downpayment of the purchase price for a house whose price is lower or equal to EUR60,000, or a downpayment of EUR3,000 plus the difference between the purchase price of the respective house and EUR60,000, if the price is higher than EUR60,000.

Furthermore, for euro-denominated loans, interest rates will be computed on EURIBOR (Euro Interbank Offered Rate) rates at three months plus a margin of maximum 4%, while for lei-denominated loans, interest rates will be computed on ROBOR (Romanian Interbank Offered Rate) rates at three months plus a margin of 2.5%, Romanian Prime Minister Emil Boc announced Sunday at the end of the meeting.

The EURIBOR rate (the average interest rate at which banks offer to lend euro on the European inter-bank market) on three-month loans currently is of 1.28%, while the ROBOR rate (the average interest rate at which banks offer to lend lei on the inter-bank market) on three-month loans currently is of 10.54% per year.

The average interest rate on loans granted by banks to population was of 18.86% per year in March this year, while the average interest rate on loans granted to companies was of 20.5% per year, according to latest data from Romania’s central bank.

According to the Executive’s decision, the government will benefit from a first lien rate mortgage on the purchased house, which cannot be alienated for five years after it was purchased.

The Romanian Government announced two weeks ago 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 people buying their first home and who did not previously benefit from a mortgage loan.