A FINANCE Ministry proposal for subsidised mortgages for lower-income applicants counts on an equal subsidy for such applicants from the banks themselves.
According to the plan, people under 35 years of age earning up to 1.3 times the national average wage could apply for a state interest rate subsidy on a mortgage of up to Sk1.5 million. The subsidy would see a reduction of perhaps 1 to 1.5 percentage points in the interest rate.
However, the proposal also calls on banks to reduce the interest rate on mortgage loans to successful banks by the same amount during the first five years of the loan, drawing protests from bank representatives.
“For some banks, reducing the margin by 1.5 percent could turn this product [mortgages] into a loss-maker,” said Ladislav Unčovský, the head of the Association of Banks, for the Sme daily paper.
The ministry proposes that the state subsidies would only be provided on loans from banks prepared to chip in with subsidies of their own.
The promise of the Robert Fico government to introduce mortgage subsidies to help young families afford new accommodation is one of the many expenditure-side promises the new socialist government has made. Financial markets are waiting to see how the government plans to achieve its aims while restricting the budget deficit to 3 percent of GDP, as cabinet promised last week.