Azerbaijan, Baku, Oct. 12 / Trend I.Khalilova, N.Ismayilova /
The Central Bank of Azerbaijan (CBA) considers amount of funds allocated for financing the social mortgage through the Azerbaijan Mortgage Fund (AMF), as reasonable and relevant to growth parameters of the 2011-state budget, CBA Chairman Elman Rustamov said. The 2011-state budget will allocate 14 million manat for social mortgage, which is equal to the 2010 figure.
"The 2011-state budget was drawn up conservatively, and the growth trends of budget projections for next year are minimal. The allocation of funds for mortgage was coordinated with the general context of the growth of the state budget. I think that is logical. If the budget increases by several percent, the increase in social mortgage by several times would be wrong, this is the position of the Finance Ministry and the government," Rustamov said.
According to Rustamov, the volume of mortgage loans issued through the AMF will exceed 75 million manat in 2010.
"Demand for social mortgage is very high, because conditions for the issuance of these loans are more favorable, but I do not agree with that the conditions of the commercial mortgage lending more onerous, as they are two times lower than interest rates existing on the market," he said.
Rustamov said the growth of the social and commercial mortgages was insignificant compared to 2009. The social mortgage is limited with budget funds and commercial mortgage - the possibility of attracting funds from the market.
The AMF has granted loans amounting to 73.5 million manat over three quarters of this year. The mortgage loans are issued through 20 authorized banks.
The commercial mortgage is funded by proceeds from the placement of the fund's mortgage bonds. The state budget finances only a social mortgage. Under the AMF's terms, the maximum amount of the issuance of conventional mortgages in Azerbaijan is 50,000 manat at a rate of eight percent and for 25 years. But the amount in the social mortgage is 35,000 manat, at an annual rate of four percent and the term - 30 years. Initial fee for the ordinary and concessional loans is 15 percent.
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.
The AMF was established in December 2005. Mortgage lending in the country began from March 25, 2006 by the AMF standards. From February 7, 2007 social mortgage was given. Demand for mortgages exceeded the budget provisions. From mid-June 2007 AMF stopped funding mortgages on its standards, resuming in June 20. To date, the AMF banks-agents issued mortgage loans worth 225.7 million manat.
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