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The ICO guarantees for housing are not compatible with those offered by the CCAAs

Date: March 29, 2024 Time: 04:47:09

The Council of Ministers authorized this Tuesday the Ministry of Transport, Mobility and Urban Agenda (MITMA) to articulate a line of mortgage guarantees together with the Official Credit Institute (ICO) that will be allocated to young people under 35 years of age, with income less than 37,800 euros gross per year, who try to buy their first home. This guarantee is intended to cover the amount corresponding to the entry, given the difficulties of many citizens to save this amount, either due to high rental prices or their salary conditions. For this reason, a percentage of 20% has been set – expandable to 25% if they are energy efficient – which cannot be added to those offered by Murcia, Madrid, Galicia, Andalusia and Castilla y León, since they are not compatible, according to sources from the MITMA to Information.

The territories governed by the Popular Party offer different conditions to access regional guarantees. In Castilla y León, the age limit is set at 36 years, while Madrid raises the maximum amount of the property to 390,000 euros, although only Galicia equals the 20% guarantee offered by the Government, so it will be necessary to wait to find out. See what price limit the Ministry sets in each autonomous community to see which option is most beneficial for the citizen. However, it seems clear that he will have to opt for one of the two options. The agreement approved this Tuesday does not appear reflected, but the sources of the Executive point in this direction and the text has to go through the Council of Ministers once all the details have been detailed with the ICO.

The president of Aragon, the socialist Javier Lambán, announced on Sunday that his government would raise this guarantee to 35%, a few hours after Pedro Sánchez announced the measure. However, the state credit is designed to eliminate the regional measures due to the significant weight that the fact of having public guarantees could have for banks, which in this case could amount to 40%. This impact would materialize in a reduction of its solvency, because the banks will stop automatically paying the amount corresponding to the entry of the house and instead, assuming the full cost of the guarantee granted by public entities.

Although the potential effect on banks plays a role in the Government’s weightings, the design of the guarantee seeks to play an electoral key against the PP, which is the one that has developed these policies at the regional level. A movement that became evident at the moment in which the president of the Government replaced an act of his party to announce the measure, which was completely unknown to his coalition partners, as different members of Unidas Podemos have denounced and sources from the Government spokesperson. Barely two weeks before the regional elections, the socialist wing has designed the line of mortgage guarantees without notifying their purple comrades, who have pointed out that this measure goes in the opposite direction to that of the recently approved Housing Law.

Some critics have also pointed to a possible over-indebtedness of these young people, who could see in these guarantees an opportunity to get a more expensive property than they could afford based on their savings. However, from the Ministry of Transport they rule out that this dynamic is going to occur, since they remember, the banking entities will be in charge of drawing up the risk profile of each client and granting the mortgage loan according to their indebtedness capacity. Therefore, as in purchases not guaranteed by the State, the banking entities will establish a maximum loan to be granted to the beneficiaries, which will not be distorted by the fact of having the public guarantee.

The guarantee will be requested through the banking entities

This Wednesday, the MITMA and the ICO will sign the agreement that will allow the interested banking entities to adhere to the lines of guarantees launched by the State, for which the Institute will begin a detailed negotiation with the banks represented in each territory. According to this design, interested young people must request the guarantee through the entity with which they intend to sign their mortgage, which must be formalized before December 31, 2025, as explained by Minister Raquel Sánchez, although the Executive leaves open the possibility that this period be extended by two years.

The ICO will provide the guarantee for a maximum period of 10 years, after which this amount must be paid, regardless of the period agreed to repay the entire mortgage and whether or not there is a grace period – in which payment is deferred. However, the rest of the financial conditions have not been disclosed, which must be established in the conversations between the ICO and the banking entities, in accordance with the guidelines established tomorrow in the agreement signed by the Ministry, according to the Government. , to facilitate the purchase of up to 50,000 homes. Within these negotiations, there is an option to join the regional and state guarantees, but it is in the hands of the financial institutions that so establish or agree with the ICO, although they will have to suffer a greater cost in their balance sheets until they get it back. From the Executive they insist that they are not designed to be compatible.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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