French lender BRD- Societe Generale has announced that it granted some 20,000 mortgage loans totaling EUR 750 million to Romanian customers applying through the “Prima Casa” (First House) governmental program in 2012.

Adrian Jantea, BRD Retail Promotion and Distribution Manager, pointed to an increase in demand on this segment of the loans at the end of the year, most likely due to the uncertainty that surrounds the continuation of the “Prima Casa” program in 2013.

“A continuation of the “Prima Casa” program in 2013 would manage to pump some life into a real-estate market that has benefited, ever since 2009, from transactions that are largely due to this program”, said Jantea, quoted by local Ziarul Financiar.

Public demand is likely to trigger the allocation of a loan guarantee fund by the Romanian sate in 2013 as well, according to BRD.

This fall, BCR and BRD, the top two banks in terms of loans granted under the “Prima Casa” umbrella, saw their guarantee limits supplemented by the Ministry of Finance to EUR 45 million and EUR 60 million, respectively.

BCR decided to only grant RON denominated loans, managing to reel in 30,000 “Prima Casa” clients for a total value of EUR 1.2 billion. BRD recently followed suit with its own version of the RON-based loan program.

“Prima Casa” programs are subject to maximum 2.5 percent plus ROBOR interest margin, as per the provisions set forth by the Ministry of Finance. The average price of a studio located in one of the main cities of Romania is of approximately EUR 30,000, the highest value being reached in Bucharest, according to Romanian media. The cheapest apartment was sold following a forced execution procedure for the price of EUR 6,000, according to imobiliare.ro.

The number of completed construction works in Romania during the first three quarters of 2012 dropped by 8.35 percent as against last year’s level for the same period, namely from 29,084  to 26, 654 apartments, according to data provided by the National Statistics Institute end of November.

"Prima Casa was a good program, we have supported it this year as well,” said Prime Minister Victor Ponta in October this year. “If possible, we will try to continue it in 2013".

The Prime Minister’s comment came as a response to inquiries about recent changes to the norms governing the implementation of the program, namely encouraging financial institutions to grant RON-denominated loans as well if such offers were not already in place at that time.

Ioana Jelea, ioana.jelea@romania-insider.com