(Bloomberg) -- Polish parliament approved a program to increase home-ownership that will offer 2%-interest on mortgages for first-time buyers.
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Faced with a tight parliamentary election in the fall and mounting public outcry over the lack of affordable housing, the ruling Law & Justice party has sought to ease access to cheap loans. A rise in interest rates to the highest level in two decades has all but snuffed out demand for mortgages.
The plan, outlined by the government, is to offer 2% interest on loans with a value of up to 500,000 zloty ($118,349). In a vote on Friday, the lawmakers in the lower chamber rejected the changes by opposition-controlled Senate, seeking to slash the interest to zero. Now the bill needs approval by the president.
The state will subside mortgages offered by commercial banks within the first 10 years of repayment. The average interest on new mortgages is currently at almost 9% in Poland.
Homebuilders’ shares have surged in anticipation of the new program. More than half of Polish residential real estate may qualify for the plan set to launch in July, according to HREIT consulting company.
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