Mortgage Bank signs agreement with Nordea Bank about government issued housing loan guarantee.
Today, on April 11, 2006, Mortgage Bank signed agreement with Nordea Bank about government issued housing loan guarantee for housing acquisitions. This was done in regards with Regional Development and Municipalities ministry’s existing “Housing guarantee program.”
Target audience for this program is denationalized property tenants as well as new families with children that wish to buy or build property, but don’t have adequate financial resources to make first down payment. Guarantee issued by Mortgage Bank serves as down payment and the borrower can receive loan in the amount of 100% property’s value. This also allows for property acquisitions even when the borrower has zero savings.
Regional Development and Municipalities minister Maris Kucinskis emphasized that this is vital tool for solving housing loan issues that are within Regional Development and Municipalities ministry’s authority. Tenants of denationalized properties and new families should be able to become homeowners themselves.
Government has allocated 550 000 LVL from its budget to finance this program. “If this program becomes popular and people will take positive advantage of it, government will definitely discuss additional financing for this program,” informed the minister. In addition, M.Kucinskis expressed his satisfaction about the fact that Nordea Bank and the Mortgage Bank have showed initiative in alleviation of housing –related issues.
President of the Mortgage Bank, Inesis Feiferis, informed journalists that the Mortgage Bank has considered program’s socially sensitive factor and bank’s current resources, but has still found resources to add to this government guarantee program coefficient 4, thus increasing the total guarantee sum to 2,2 million LVL.
However, Juris Cebulis, manager of the Mortgage Bank’s Support program Altum, specified that the main task for Altum is to issue corporate loans and to offer advice regarding government and European Union support programs. For instance, presently Altum is working on two government prearranged programs – new entrepreneur training and consulting program, as well as housing loan guarantee program.
“Nordea Bank is the largest housing loan issuer in the Northern Europe, and by expanding in the Baltic States, the bank has already implemented several loan innovations in Latvia,” said Valdis Siksnis, Head of Nordea Latvia. “By making the next step and joining the Housing development loan program, we wish to alleviate housing –related problems for families in Latvia, even for those, who don’t have enough savings to purchase or show down payment for an apartment or house. Nordea pricing and regulations aren’t the only arguments that will drive responsiveness among Latvian households, which will be able to receive 100% financing for property building or purchase. To compare, in Estonia, more than 15 000 loans are issued for households in cooperation with guarantee fund, and the overall loan volume in similar housing program has surpassed EUR 400 million*”.
Agreement, signed between banks, foresees maximum guarantee amount as 25% from the apartment or home value, but it cannot exceed 15 000 LVL. By signing this agreement, Nordea Bank is the first that has engaged in the realization of the Housing loan guarantee program. Other Latvian commerce banks have also showed interest to participate in this program.
Martins Panke, Regional Development and Municipality Ministry’s Media Secretary, 7 770 417, 6 556 965, Martins.Panke@raplm.gov.lv
Kristians Pudans, Head of Marketing and Public Relations in Nordea Bank, 7 096 244, 9 137 311, firstname.lastname@example.org
Aldis Hofmanis, PR Specialist in the Mortgage and Land Bank, 7 774 244, 9 237 794, email@example.com