Young first-time buyers can apply for a government loan from Thursday of up to €17,500 to cover their 10 per cent deposit payment.

A total of €3 million has been allocated for the scheme, first announced in the October budget. 

Those aged between 21 and 39 can apply and will have 25 years to pay it back. 

Social Accommodation Minister Roderick Galdes said that some young people were struggling to come up with the 10 per cent of their property’s price and so were unable to go to the bank to request a loan. 

Banks provide home loans against a deposit of 10 per cent of the value of the property. 

“The state felt that it should incentivise this so more people purchase homes,” Galdes said. "Not only will the government be paying out the loan but we will also guarantee the interest."

First time-buyers' property price must not exceed €175,000, which according to Galdes is the average price young people were spending on their first homes. 

Asked by Times of Malta whether this was a realistic representation of the property market, Galdes said studies were carried out in order to identify the prices being spent by those unable to pay the deposits. 

“Those earning more are obviously looking at higher prices but then they wouldn’t be the ones unable to pay the deposit,” he said.

Two banks – APS and BOV – have agreed to be part of the scheme. Finance Minister Edward Scicluna said that coming up with the scheme was no easy feat but insisted “no government or policy maker can ignore housing”. 

“Banks are not charitable organisations but they should also be a bit conscious of what a country is going through,” he said.