08.Jul .2021 15:00

How Much Will The Gov’t Spend On Mortgage Subsidy This Year?

How Much Will The Gov’t Spend On Mortgage Subsidy This Year?
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The Government of Georgia has presented a new project a few days ago, according to which, a mortgage subsidy program will apply to those families who will have newborns. According to the Minister of Economy Natia Turnava, this subsidy for the first and second child will cover 6% of the interest rate, and for the third and subsequent child this figure will be 8%.

Enterprise Georgia will administrate the mortgage subsidy program. The head of the agency Mikheil Khidureli declares that the subsidy will be issued for loans in the amount of 60,000 to 300,000 GEL. In addition, the annual budget of the project is set at 5 million GEL. At the same time, Mikheil Khidureli says that the budget will depend on the demand of potential beneficiaries.

According to the Minister of Economy Natia Turnava, the subsidy program will be launched in the near future, but the exact terms are still unknown.

The decision to issue a mortgage loan is made by the commercial banks themselves. The fact that a particular family has a newborn will not guarantee that this family receive mortgage loan, as the main thing to get a loan is the income of the borrower. If a family has insufficient income to finance a mortgage (with or without a child), they are unlikely to be able to get one. This circumstance points to the fact that the beneficiaries of this subsidy mechanism will be mainly middle- and upper-middle-income borrowers.

This will be the second program of the Georgian Dream to subsidize mortgage loans. The previous program was valid for 2020 and all mortgages approved for the purchase of a newly built apartment up to GEL 200,000 were subsidized. Under the project, the government subsidized 4% of the interest rate. A total of 8,443 loans were subsidized under the project, and the total volume of these loans was GEL 828 million.

Borrowers will receive the subsidy for 5 years.