STA, 12 December 2019 - The Finance Ministry has drawn up a blueprint for a law introducing government guarantees for housing loans. These would be fully guaranteed up to EUR 150,000 in principal provided the borrower provides 20% in the form of own funds.
Unveiling the proposal in Ljubljana on Thursday, Finance Ministry State Secretary Alojz Stana said the scheme was aimed at the young up to the age of 35, young families and those in fixed-term or precarious forms of employment not older than 40.
A 100% guarantee would be available for housing loans amounting to up to EUR 150,000 in principal with a maturity of up to 30 years, rescheduling included.
The borrower would have to chip in at least 20% in the form of own funds, which is in line with loan requirements of the central bank, Banka Slovenije.
The total amount of guarantees is planned at up to EUR 500 million in principal. The annual amount of funds would be determined in the state budget implementation acts.
The borrower would be able to pick the bank they take the loan from, while the guarantor would be able to pay up to six past due instalments to the bank instead of the borrower.
This option would be available to the borrower several times while the loan was active, but only under condition that liabilities from the recourse claim were settled.
If the guarantee was enforced, the state's recourse claim would be repaid from the proceeds from the sale of the property with the national Housing Fund having the pre-emptive right to buy.
Unofficial information indicates that the ministry is still looking for a solution how to enable the borrower who was unable to repay the loan to stay in the property.
One option would be non-profit rental, but there would be a scope for abuse.
The ministry says that the scheme is aimed at creditworthy borrowers, so it does not interfere with the central bank's tightening of criteria for consumer loans.
However, the ministry hopes that Banka Slovenije may reconsider the consumer lending brake because of the state guarantee scheme.
The ministry expects that the lending terms for state-guaranteed loans would be easier on the borrowers. It hopes that the scheme's impact on property prices would not be excessive.
The scheme would be implemented by the state-run export and development bank SID. Guarantees would be issued for loans hired until the end of 2030.
The blueprint has been agreed with the Ministry of the Environment and Spatial Planning and is expected to be submitted for public consultation in January.
The scheme would be just one of housing policy measures with the main objective being increasing the fund of rental housing. Housing policy measures are to be updated in a new housing loan that is in the pipeline.
Following the central bank restrictions on consumer lending, a state loan guarantee scheme has been proposed by the opposition Democrats (SDS), but the corresponding bill was voted down in parliament.