This Tuesday, the Government approved a line of 2,500 million euros of guarantees through the ICO so that young people no more than 35 years old and families with dependent minors can access their first home. This measure, which aims to help 50,000 people, consists of the ICO guaranteeing 20% of the value of the home so that it can access a mortgage. This benefits the person because they will not have to have anything saved to finance their purchase. However, the mortgaged party will have to pay 100% of the money borrowed, which can be almost 3,000 euros more expensive per year, since the interest will be calculated on the total value of the home.
On a loan of 200,000 euros, the monthly payment would go from 928 euros per month to 1,160 euros, which is about 232 euros more per month. This would mean that per year, the mortgaged party will have to pay 2,782 euros more per year. Furthermore, according to Kelisto.es calculations, the total interest would rise from 78,324 euros to 97,906, that is, at the end of the mortgage loan you will have paid 19,581 euros more in interest.
Without this guarantee, the mortgaged party could only access financing of 160,000 euros., since, normally, banks offer 80% of the price of the property, although there are always exceptions. So I would have to have saved 40,000 euros to be able to buy that house. And this is the main reason why the Government has released this line of guarantees, since the most important problem for young people is that they have not been able to save to be able to put down that 20% that the bank requires.
However, financing 100% of the home purchase has the risk that it will be more expensive due to interest and because the installment is made on the total price of the house. This 20% guarantee does not mean that the Government gives that amount to the person who wants to mortgage, but that in the event of non-payment, it would be the ICO that would respond to the bank or financial entity.. That is, the person will have to pay the total price plus interest on that 100%.
Julio Díaz is a professor at the CEF – Center for Financial Studies and at the UDIMA. He explains that the main problem of this group is not having enough money saved and that the guarantee alleviates the first barrier to entry. But he clarifies that there is an endemic problem that is job insecurity that has medium and long-term effects and It could have consequences when it comes to being able to pay the fees.
The guarantee itself will have no cost, that is, neither the client nor the bank will pay for requesting a guarantee, which in some cases does have one and usually ranges between 0.5% and 1% of the value of the guarantee. mortgage. What you will have to take into account is that the consumer must have 10% of the value of the home for initial expenses.
Until now, the only thing confirmed is that the maximum amount of mortgages backed by the State cannot exceed 100% of the value of the financed home (taking the lowest value between the purchase and appraisal). Taking into account the initial estimates of the Government, which calculated that the cost of this measure would be 2,500 million euros and that the number of potential beneficiaries would be 50,000, the average ICO guarantee for housing would amount to 50,000 euros per applicant. Given that the mortgage that can be guaranteed with this aid may be up to 100% of the appraisal or purchase value of the home (whichever is the lower of the two), the average cost of the property to be purchased would be, at most, 250,000 euros. , according to Kelisto’s calculations.
Given this, Asufin asks that these ICO loans be granted free of links with price bonuses, in the form of insurance, and other products. “We already had the experience of ICOs for SMEs that occurred during the pandemic and we do not want that to happen to our young people,” the association points out.
One of the criticisms raised by this measure is that banks can make their product more expensive. As HelpMyCash points out, it is still early to know if banks will offer more expensive or cheaper loans than the current ones. However, this program is already installed in some autonomous communities with agreements with the main entities and the offer is the same as for clients without that endorsement. In addition, many banks have among their products specific mortgages aimed at this group, in which they also provide financing beyond 80%.
It is not yet known which entities will be included in the measure, but the Government trusts that the majority of banks will adhere. The Minister of Housing and Urban Agenda, Isabel Rodríguez, has shown her confidence in the majority support of the financial entities based on the meetings held by the Executive with the sector and because, in her opinion, “the entities must be allies (of the Government) in housing policies.”
Despite this help, banks will continue to carry out a risk analysis on the client, this means that the mortgage request may be rejected. “The solvency requirements are mandatory”says Carlos Balado, professor at OBS Business School. In addition, he adds that employment stability will be taken into account. For this reason, he does not consider that the measure does not solve the problem for the majority of low-income young people.
The price of mortgages has risen sharply in the last two years. The more restrictive monetary policy of the European Central Bank (ECB) has made credits and loans more expensive […]
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2024-02-13 23:23:01
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