Azerbaijani bank appeals for membership at Mortgage Fund

Business Materials 25 April 2009 13:48 (UTC +04:00)

Azerbaijan, Baku, Apr. 25 / corr Trend I.Khalilova /

Azfinansbank, a new bank which launched in February 2009, has appealed to the Azerbaijani Mortgage Fund (AMF) at the Central Bank of Azerbaijan, to become a member, Azfinansbank Managing Board Chairman Murad Guliyev.

"We plan to work with mortgage fund closely and to have large volume [of loan] for house financing," Guliyev said.

At the same time, the bank developed its mortgage program and it will be applied in line with the AMF.

"I think overall policy of our activities, including mortgaging, will be prepared by the end of May," the Azfinansbank head said.

He withheld volume of loan to be directed at mortgaging this year.

The AMF has 22 authorized bank organizations, 12 insurance companies, 15 audit organizations and one mortgage agent.

A total of 14.5 million manat was deposited in the budget to finance social mortgages in 2009.

Mortgaging at AMF standards was launched on March 25, 2006. Social mortgaging was set up on Feb. 7. The demand for mortgages exceeded budget assignments. The fund ceased AMF-standard mortgage financing in mid-June.

In 2005-2007, the AMF received 46 million manat from the budget. Thirty-four million manat have been allocated through two tranche 22 million manat loans. The AMF-standard loan portfolio totaled 67.8 million manat, with a total banking mortgage portfolio at a rate of 250-300 million manat.

The credit rates of commercial banks fluctuate from 8 to 18-20 percent on terms from 10 to 25 years.

However, the AMF intends to resume mortgage lending next year with the assistance of the International Financial Corporation (IFC).

The subsidized mortgage model is applied by the AMF and restricts mortgage financing resources. A model for commercial mortgages will be introduced to expand opportunities and attract extra funds

Commercial banks began attracting foreign loans through mortgages after suspending AMF loans. However, the activity decreased considerably due to global financial crisis, which made some banks to cease their own mortgage program.

The first loan from the Black Sea Bank of Trade and Development at a rate of $8 million was given to Texnika Bank in 2007. In 2008, the IFC granted $15 million to UniBank to finance the dwelling. The second loan at a rate of $5 million was granted to Azerdemiryolbank. The IFC is considering the opportunity to grant mortgages to Texnika Bank and Mugan Bank by the end of the year.

Official rate on April 25 is 0.8035 AZN/USD.

Do you have feedback? Contact our journalist at: [email protected]