Romania to maintain subsidies for mortgage loans despite IMF criticism

Romania’s Government will not discontinue extending guarantees for the purchase of homes (Prima Casa / First Home), as recommended by the International Monetary Fund (IMF) last week, but will launch the enhanced version “One Family - One Home”, finance minister Eugen Teodorovici said, according to local Mediafax.

The improved program involves state subsidies worth EUR 200 million per year, according to the draft bill consulted by Profit.ro in May. The IMF’s team of experts visiting Romania for consultations on the country’s economic development recommended the Government to phase out First Home program and abandon the new benchmark for the mortgage loans, IRCC.

The new program comes with looser criteria and more generous incentives for Romanians looking to get mortgage loans, including state subsidies for interest rates, particularly for families with kids. The maximum value of the property will be RON 570,000 (EUR 120,000) more than double compared to that of properties that qualify for the First Home program (RON 250,000). The state will guarantee 80% of the loan value, versus 50% under the First Home program.

The interest rate charged by banks will be fixed for the entire period of the contract, and it will range between 0.9% and 5.5% per year depending on the structure of the family and the number of children, versus two percentage points over the money market interest rate under First Home program.

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