Azerbaijan, Baku, Sept. 4. / Trend N. Ismayilova /
The international financial institutions showed interest in bonds of the Azerbaijani Mortgage Fund (AMF), working under the Central Bank (CE), chairman of the CE board, Elman Rustamov said.
"The Fund's capital allows providing additional emission of bonds and not only the local investors, but also the international organizations are interested in its mortgage bonds," Rustamov added.
In addition, the strategy of the development of the mortgage market will be determined by late 2009. The head of the CE believes the country's mortgage market should be developed further, because there is a large demand in this kind of loans on the market.
So far, about 800 mortgage loans worth 1.1 million manat has been issued through the Azerbaijani Mortgage Fund (AMF), working under the Central Bank. About 370 loans of this amount fell to August. As a result, about 2,800 families have been able to solve their housing problems, Rustamov said.
"Moreover, the mortgage loaning contributed to the recovery of the country's construction sector, which plays a major role in non-oil sector of the country," Rustamov added.
The AMF issued loans for a long term and at low interest rates. Average term of the loan was 24 years and average interest rate was 7.6 percent per a year. The Fund issued mortgage loans worth 75.8 million manat in 2006-2007, which enabled to solve housing problems of 2,000 families.
Therefore, the demand exceeded the proposals by several times at the four auctions held by the Fund on placement of its bonds. At the initial stage AMF registered bonds with a nominal rate at 55 million manat, the amount of fund drawing will be increased in the future under such a demand in the mortgage loans.
The Fund defined loan limits for authorized banks to remove differences between existing funds and granted loans. The Fund set limits for each bank, taking into account the potential of the bank, its clientele base and prudential regulations. At present, banks in view of its liquidity and managing the risks posed by the mortgage loans, receive applications and issue loans in accordance with the limit.
The bank issues mortgage loans secured on real estate in national currency to the Azerbaijani citizens and the maximum volume of the mortgage loan to 50,000 manat under 8 percent per year for the term of 25 years, social mortgage to 35,000 manat under a 4 percent per year for up to 35 years.
Conditions of the mortgage lending are as the following: loans must be issues in the national currency with manats and only to Azerbaijani citizens, and an object of the mortgage can only be an apartment or private houses, volume of the mortgage lending must not exceed 85 percent of the market price, monthly payment for a loan must not exceed 70 percent of debtor's monthly income, as well as presence of an agreement on life insurance and others.
Preferable conditions are granted to members of families of war victims, families of national heroes, internally displaced persons, civil servants with at least a three-year experience, candidates PhD and PhD, persons making special contributions to sport, as well as militaries with at least a three-year service term.
Each family having the right to a lax mortgage loan can use this chance only for one time.
In connection with the launch of mortgage loans, 18 banks authorized by the AMF were approved. The 2009 public budget has allocated 14 million manat to finance social mortgage lending.
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