Hungarian version of "First Home" programme could be cancelled

The Hungarian government, which ten years ago launched a programme similar to the "First home" project announced last month by the Romanian government - is now seriously considering giving it up, or, at least restricting it, after it has proven very costly to the state budget. "Since 2000, the state has spent 1,500 billion Forints (5.2 billion euros at the current exchange rate) on this programme, which has not achieved all its goals yet," says Laszlo Diosi, head of the Romanian subsidiary of OTP Bank, the largest financial group in Hungary. On the Romanian market, the Government intends to award guarantees for home loans, amounting to up to 1 billion euros - at least in a first stage. Benefiting from the state's sovereign guarantee, the banks should significantly reduce loan interest rates, while another requirement is for a very small downpayment to be accepted from the client. As part of the Hungarian programme, buyers can to receive an up to 10 million-Forint (around 35,000-euro) subsidy for Forint-denominated mortgage loans. This facility started not to be used any more after the significant expansion of cheap, foreign-currency loans, Diosi adds.