The Government approves the line of public mortgage guarantees for young people and families with children with dependent minors
This Tuesday, the Government approved the line of public guarantees for the purchase of a home by young people up to 35 years of age and families with dependent minors, a measure for which 2.5 billion euros are mobilized through the Official Credit Institute. (ICO). “Today we take one more step, we fill one more layer of concrete to consolidate housing as the fifth pillar of the welfare state,” said the Minister of Housing, Isabel Rodríguez, in the press conference held after the Council of Ministers.
The public guarantees approved this Tuesday cover up to 20% of the price of the home (up to 25% if it has an energy rating of D or higher) and may be requested for the acquisition of a first residence that is the buyer's habitual and permanent residence.. As Rodríguez explained, the objective is to support those people who want to buy a home and due to lack of prior savings cannot afford the down payment on the mortgage.. “The State will be its guarantor,” explained the minister, who has estimated the number of beneficiaries to be reached at 50,000 people.
To access these guarantees, the applicant must be a natural person over 18 years of age and their income may not exceed 37,800 euros per year per person (4.5 times the IPREM), an income level that is adjusted if it is a couple or there are minors in charge. In this way, if the home is purchased by two people, the income limit is raised to double. The threshold increases by 0.3 times the IPREM (2,520 euros gross per year) for each dependent minor and, in the case of single-parent families, the limit can increase by an additional 70%.
In addition, you cannot have assets of more than 100,000 euros and uninterrupted residence in Spain is required for the two years prior to applying for the loan.. Given that the objective is to facilitate access to a first home, those who are already owners will not be able to benefit from these guarantees, unless they prove that they cannot have their apartment due to separation, divorce or any other cause beyond their control or because it is not accessible. In the Community of Madrid there is already an initiative similar to the one launched this Tuesday by the Government. This is the My First Home program, which in 2022 made it possible for a thousand young people to sign almost 650 mortgages.
Regarding the maximum price of the home whose purchase can be guaranteed with this new tool, the minister has pointed out that the income requirement itself will condition the loans that financial entities are willing to grant, given that the buyer must be able to pay. the monthly fee. “The income indicators will already determine what types of mortgages can be requested,” he explained, while clarifying that, however, the agreement between the ICO and the ministry will establish a maximum limit for the sale or appraisal price. depending on the location of the home. “The ultimate objective of the ministry is that to access decent housing no Spaniard has to dedicate more than 30% of their income,” he added.
Once the conditions and requirements of the guarantees are approved this Tuesday, it will be the financial entities that will have to adhere to the agreement that the Ministry of Housing is going to sign with the ICO if they want to offer their clients the possibility of benefiting from public support. “It is an agreement with the ICO that we are going to close after this agreement of the Council of Ministers to which the financial entities, with which we have already held conversations, will have to adhere later,” explained Rodríguez, who said he trusted the willingness of the banks to take advantage of the initiative.
The period for the return of state guarantees will be ten years, during which the home must be maintained as a habitual residence – it can only be rented in the event of a move due to marriage, separation or job transfer.. The new instrument can be requested until December 31, 2025, although there is the possibility of it being extended for two more years. The head of Housing has assured that the initiative will contribute to freeing the rental market in stressed areas, by allowing the departure of those people whose desire is to acquire a home to own and thus leave space for those who prefer to rent.
Rodríguez has recognized that housing “is a complex problem, where there are no easy or unique solutions”. Along with the agreement concluded this Tuesday, the Ministry of Housing is also finalizing another agreement with the ICO for the construction of 40,000 homes through loans to public and private developers, an initiative that the Government approved at the end of 2023 and that it intends to launch before May the month of February end.
“Free of ties”
The Association of Financial Users (Asufin) considers it “critical” that ICO guarantees are granted “free of links” to other financial products, that is, that the possibility of banks offering to reduce mortgage interest rates is prevented. granted together with the guarantee through, for example, the contracting of insurance. From Asufin, they also believe that “a mortgage for the purchase of housing can limit the professional development of a young person”, by limiting their mobility, and they call for promoting a “solid” officially protected rental housing policy instead of encouraging buys.
Furthermore, they consider that, without an adequate stock of affordable public housing, the new guarantees can become a “disguised subsidy” for developers.. “In certain towns, housing prices are extremely stressed and this disproportionate cost will not be assumed by the developer of new housing, but by the young buyer,” they warn in a statement.