© ANP / Peter Hilz
The Flemish government is introducing a Flemish Housing Guarantee. With this, she wants to help up to 5,000 young people who want to buy a home for the first time to obtain a housing loan more easily.
“It is very important that we maintain the option of buying our own home for current and future generations,” says Flemish Housing Minister Matthias Diependaele (N-VA). “Today we have established that personal input is a strong barrier for many young people to fulfill their dream of living.” To partly meet this need, he came up with the Flemish Housing Guarantee. That instrument has now received the green light from the Council of Ministers. This should result in the first housing loans from 1 January 2025.
The idea is that the Flemish government will guarantee part of these loans, so that banks can allow young buyers to borrow up to 100 percent of the house price more quickly. Now those banks demand up to 20 percent of their own contribution, which is an insurmountable obstacle for many young workers. However, those banks have room within their risk margin to grant up to 35 percent of their loans above 90 percent. They only fill that margin for 22 percent. According to the calculations of the Diependaele cabinet, up to 5,000 young potential buyers will be left out. They want to support that now.
Housing Minister Matthias Diependaele (N-VA) is confident that the intervention will not weigh on the treasury. — © BELGA
The Home Guarantee only applies to first-time buyers, i.e. those who have never received a mortgage loan before. They do not have sufficient savings to cough up the last 10 percent of their own resources, but in principle they do have the option to repay their loan. It remains up to the banks to determine whether they can bear that loan. Moreover, the house they want to buy must not cost more than 434,830 euros. For comparison, the average house in Flanders goes for 355,941 euros. If all these conditions are met, Flanders will guarantee the last 10 percent of the loan.
Fewer loans
Diependaele is convinced that the system will not weigh on the treasury. If there are long-term defaults, the bank must first sell the house before it can turn to Flanders. They can only contact the government if there is still a loss on the books after the sale. And for each requested guarantee, the banks must pay a premium of 0.10 percent to Flanders, so that Flanders can cover the estimated costs. “This is highly exceptional,” says Diependaele. “The costs are therefore limited and we can still give ownership in Flanders a boost.”
The intervention comes none too soon. Because interest rates have risen sharply in the fight against inflation, it has only become more difficult for buyers to get a loan. The number of mortgage loans granted fell sharply last year, as did building permits. “The Woonwaarborg aims to reverse this negative trend and send a signal to buyers and the construction sector that we remain fully committed to ownership of homes.”