Romania's First House program gets lower funds for next year

The Government will allocate RON 2 billion (EUR 431 million) next year for guarantees granted in the First Home Program. The Finance Ministry allocated RON 2.67 billion (EUR 576 million) this year. The Government will also reduce the maximum interest margin that banks can charge over the reference rate (ROBOR) from 2.5% to 2%, reports local Profit.ro. The 2% margin is currently applied only for the purchase of houses whereas the 2.5% margin is for loans for housing construction. The five-year strategy for the First House program, approved last year, provided an annual ceiling of about RON 2 billion for 2018, 2019 and 2020. The ceiling would drop to RON 1.5 billion for 2021. The state has granted over 236,000 guarantees worth RON 20.5 billion (EUR 4.4 billion) since launching the program in 2009. Based on these guarantees, local banks have granted loans worth over RON 41 billion (EUR 8.8 billion). The program has helped banks resume their lending activity in the difficult post-crisis environment. However, the central bank has recently called for changes in the program, which no longer serves its social purpose. The Finance Ministry may introduce new criteria for granting guarantees within this program starting next year. Romanian state to gradually reduce the First House program editor@romania-insider.com