CEC Bank, the state-owned banking institution, has just received a EUR 20 million increase in its guarantee limit for the First House 4 program, under which customers can receive state-guaranteed mortgage loans when buying their first home.

The bank has created its own program under the First House 4 umbrella. Called “Our first home,” the CEC Bank program allows customers to purchase property, both old and new, with a minimum 5 percent contribution of the value of the property. CEC Bank mortgages in the scheme have a maximum 30 year financing period. Applicable interest rates stand at ROBOR level for 3 months plus 1.9 percent for RON denominated loans, whereas EUR loans will bear the EURIBOR rate set every 3 months plus 4 percent.

“Due to this new increase in the guarantee limit corresponding to the First House 4 program, CEC Bank continues to provide its customers with one of the best offers on the market,” stated Radu Gratian Ghetea, President of CEC Bank. “By accessing “Our first home” loan from CEC Bank, our customers benefit from attractive interest levels, both in RON and in EUR, with no commission applied by the Bank”.

This fall, the two major players on the First House turf, BCR and BRD, also received guarantee limit supplements from the Ministry of Finance. BCR gained an extra EUR 45 million, while BRD got EUR 60 million. Both banks recently decided to focus on RON denominated mortgage loans to be granted under the First House program.

Expectations are high as far as a continuation of the First House program in 2013 is concerned. Prime Minister Victor Ponta’s statement on the matter back in October kept bankers hopeful. “First House was a good program, we have supported it this year as well,” stated Mr Ponta. “If possible, we will try to continue it in 2013”.

The re-emergence of an older initiative concerning the purchase of a first house, dating back to the Emil Boc cabinet’s time and now included in the Ponta cabinet’s four year governing program, sent some shivers down the spines of all those looking forward to a continuation of the program. In January 2010, an attempt was made by the Boc government to instate the rule that properties purchased under this program should all be new. The Competition Council issued a warning against the enforcement of this rule on the grounds that it would have unfairly favored part of the real-estate market. It remains to be seen whether this new attempt to turn Romanians’ first house into a new house will be met with any objections from the competent authorities.

From the beginning of the First House program up to October 2012, a total of 74,426 guarantees were granted for over EUR 2. 917 billion of accessed loans, according to figures published by the Romanian Government. A guarantee limit of approximately EUR 300 million was still available at the time.

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