First Home to restart after guarantees distributed to banks

Banks are again accepting applications for mortgages through the “First Home” scheme after the SME Loan Guarantee Fund (FNGCIMM), managing the state guarantees within the scheme, has distributed the total cap of 200m euros available for this year. The total cap was portioned on the basis of previous results and of projections presented for this year.
The total guarantee cap has been dramatically reduced against 2010 since the number of applications for these loans gradually diminished in the second half of last year.
Demand slid after products with lower interest rates emerged on the market and as the process of approving the state-guaranteed loans is not a smooth one. The main advantage, though, is the down payment of just 5% of the loan value, compared with the 30-40% one in the case of a standard mortgage loan.
Banks participating in the scheme in most of the cases maintained the same level of interests as last year. There are situations, though, where bankers are trying to bolster demand by slashing interest rates.