Romania’s First House program, a state-backed scheme that allows young people to get cheaper mortgage loans for buying their first house, will receive additional funds worth RON 175.5 million (EUR 39 million) this year.

This sum has remained unused last year and will be added to the RON 2.5 billion (EUR 554 million) funds already allotted for the program’s continuation in 2017, according to the Finance Ministry.

The state doesn’t actually spend this money but uses it to guarantee up to half of the mortgage loans local banks grant via the First House program. The state pays the guarantee to the bank only if the mortgage debtors default on their loans.

This year, banks will be able to grant loans worth RON 5-6 billion (EUR 1.1-1.3 billion) within the program. Unlike the previous years, when the state guaranteed half of the mortgage loan value regardless the house bought, this year the program favors the purchase of new houses. The guarantees will cover less of the loans for the purchase of old houses.

editor@romania-insider.com