BNR official: ‘First House’, a “modest” loan program for Romanians

The “First House” program had a limited use and only by low-income borrowers, similar to the situation in the case of standard mortgage loans. Thus, the program had a modest role from a social point of view, Valentin Lazea, National Bank of Romania (BNR) Chief Economist said on Wednesday.

”The only social aspect that this program provides is a greater access of young people to the purchase of a dwelling, the share of debtors aged up to 35 being higher in this case,” central bank official stated.

Lazea believes that another important aspect of the social nature of lending offered by this program is the relatively low cost that is ensured by the low interest rate on the one hand and, on the other, by exempting these loans from the requirements on the advance’s minimum level, respectively on the loan / guarantee index.

Currently, the loans granted under the “First House” program amount to RON 33 billion, equivalent to 4.5 percent of GDP, in September 2016, a study reveals. In 2017, the volume of newly granted loans, according to the approved guarantee ceiling, is RON 5 billion.

According to the study, the continuation of this program, as the activity of the credit market has resumed, raises problems regarding the efficiency of the budgetary effort.

BNR’s Chief Economist states that the non-performance ratio of these loans is extremely low, but in the risk assessment it should be taken into account that these loans did not go through a full credit cycle.

budgetary effortfirst houseloan programNational Bank of Romania (BNR) chief-economistValentin Lazea
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