Azerbaijan, Baku / Trend / The mortgage market of Azerbaijan will be re-establish in 2008. For this goal, the 2008 Public budget of Azerbaijan envisages allocating AZN 35mln for Azerbaijan Mortgage Fund, which is an increase of 70% from 2007.
However, the funds allocated from the Public budget for financing mortgage credits are being envisaged for only certain layers of population like disabled people, young families, etc. Commercial banks also implement mortgage programs. The difference between the social mortgage and mortgage credits of the commercial banks is that the first one is presented under 4% interest rate per year and the second one - 8%.
The interest rates of the mortgage credits in 2008 will increase. The key criteria are the level of the inflation, price increase for the construction materials. The price increase is mainly observed with regards to marble (8,3%), tree (6,8%), granite (4,1%). It is not excluded that the rate of the commercial mortgages may be near to the profitability of the State securities. Only the people named as preferential will be able to receive mortgage credits on preferential terms. Through increasing the interest rates, the Fund may attract finances to give mortgage credits.
The quality of the service should be improved, because such flow of applications which were accepted in 2007.
The mortgage credit in the USA had negative assessed the activity of not only the US banks. Due to it, the banks will attentively go to long-term credits like mortgage instrument. Nevertheless, the mortgage market in Azerbaijan is very attractive because the demand for housing is increasing in the Country. The real estate price increase is also linked with the further development of the mortgage in the Country.
Generally AZN 260mln credits have been granted in Azerbaijan, with AZN 65mln financed at the expense of the State.
(Leyla Abdullayeva - expert of Trend Analytic Center)