The prospect of granting risk free loans, even in foreign currency, has attracted sixteen banks, which sent offers to the Finance Ministry to be accepted into the "First Home" programme.
Bogdan Dragoi, state secretary with the Finance Ministry who runs the technical team in charge of this project, says he does not intend to limit access to a preset number of banks adding the starting criterion is for a bank to have each county covered with branches. Another criterion will be the credit application processing speed, which, traditionally, is a problem for many banks.
Still, banks will not have to sell an identical product, either in RON or in euros, but only meet a series a minimal criteria that will be set and standardised soon based on the offers received from the sixteen banks and the talks with them.
The Finance Ministry is currently not imposing EURIBOR or ROBOR rates as cost references, accepting the offers of the banks that work with their own interest rates or base rates, calculated by certain formulas that have to be explained to the clients, though. Banking sources said the interest rate on euros could go down to 6% a year.
The certain thing is that the financing product secured by the state will not be assimilated to a mortgage loan and will be put in a separate class by the National Bank in terms of prudential norms: the minimum down payment required from the client will be 5%, banks will no longer have to spend on provisions for those loans with repayment delays of more than 90 days and will not require additional guarantees for potential differences between the value of the home as set by the evaluator and the sale price.
The procedure to assess the client's indebtedness capability will remain in place, though.
Besides the 5% down payment, the client has to prove he can pay the first three interest instalments. He will also have to bear another cost, the fee for the Credit Guarantee Fund, whose level has not yet been set but will be lower than that charged from SMEs that get guarantees for their loans.
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