First Home Programme to get less funding, but to continue for a few more years

Anca Alexe 15/02/2018 | 16:02

The manager of the National Guarantee Fund for SME Loans (FNGCIMM), Alexandru Petrescu, said on Wednesday that the funds allocated for the “First Home” programme are shrinking, but that the programme will continue to exist for a few more years.

Petrescu said: “The First Home Programme has a clear predictability. There were RON 2.5 billion allocated in 2017, almost RON 3 billion in 2016, in 2018 there will be about RON 2 billion, same as in 2019 and 2020, and in 2021 it will go down to RON 1.5 billion. It is one of the most successful governmental programmes in the post-revolution era. There have been over 240,000 guarantee letters since 2009.”

He added that the First Home programme is currently in a reduction strategy, as it was launched with the purpose of unlocking loans for the real estate market: “During that period there were very few loans for apartments or homes, and the programme came to help banks give out loans. In 2018 there is intense loan activity, and you can see that banks have other loan schemes besides the First Home loans, with somewhat similar terms and conditions. From the data we have, we’ve seen that people prefer paying even more than 5 percent upfront, with an average rate of 7-8 percent, even if 5 percent is an option. They would rather pay more in order to have lower monthly payments.”

Alexandru Petrescu noted that this year will bring something new to the programme, as an intermediary fund allocation will be done in the middle of the year, since not all the funds will be distributed to banks in the first stage. The remaining quarter of funds will be distributed to the best performing banks towards the end of the year.