Private banks one step ahead of state backed mortgage scheme

At the beginning of 2003 a law entered into force which introduced state subsidized long-term fixed interest rate loans for buying flats. The main goal of this law is to stimulate the ailing construction industry. The first proposal was to set the annual interest rate at 8%, which was afterwards lowered to 7%. The bill has the force of law, but is cannot be used in practice as the government has not yet issued a regulation on the rules of co-operation between commercial banks, which would be lending money, and Bank Gospodarstwa Krajowego, which would be subsidizing them from the budget. In the meantime, some banks have already introduced their own similar schemes with interest set at 6.99%. Due to this, the Housing Office is negotiating with the Finance Ministry to lower the rates on such loans further to 6%. The programme should begin in March, but according to analysts it might not stimulate the construction sector, as the regulation was introduced too late and needs to be accompanied by impulses to other sectors of the economy. (www.rmf.pl) M.M.