The new version of the "First Home" scheme discussed by themembers of the Government with bankers intends for the lending riskto be equally shared by the state and banks, without alteringinterest terms, according to the Prime Minister Emil Boc.
From a client's perspective, "First Home" loans have theadvantage of a lower downpayment, at least 5% of the amount,compared with the minimum 25% usually required by banks, althoughthere is more red tape involved and sometimes even the cost ishigher.
Yesterday Premier Boc met with representatives of commercialbanks at the Finance Ministry.
"We will double the number of beneficiaries by doubling thecurrent guarantee cap. If banks agree to this version, there willbe another 1.5 billion euros in the system. Banks would carry 50%of the risk and the state 50%. A further 1.5 billion euros inguarantees can be added to the current 1.5 billion euros," said Bocafter the meeting at the Finance Ministry.
The Government allocated caps of 1 billion euros in 2009 and 700million euros in 2010, with the 200 million euros carried over into2011.
Currently the state takes on the entire risk, with loans grantedfor buying a home through the "First Home" scheme being fullyguaranteed by the state.
The number of banks taking part in the "First Home" scheme hasremained the same as last year - 21 institutions.
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