Azerbaijan, Baku, May 10/ Trend, E. Ismayilov /
The emergence of guarantee mortgage funds can create conditions in Azerbaijan for the development of mortgage lending, the chairman of the Central Bank of Azerbaijan (CBA)
Elman Rustamov told journalists today.
"At present, a new strategy of the development of mortgage lending is being prepared. It envisages simplifying mortgage issuance in the country," Rustamov said. "One of the considered directions is the revision of the maximum amount of mortgage lending, reducing interest rates and carrying out measures that will create conditions for the mortgage development in the country," he added.
He said that studies indicate that the current maximum loan size does not allow young families to buy apartments in new buildings, so they prefer housing in the secondary market.
"Mortgage lending terms will be revised to create conditions for youth in order to upgrade the housing stock," Rustamov said.
In addition, the possibility of expanding commercial mortgage is also being considered, as there is great need for this in the country, he added.
Under the AMF's terms, the maximum amount of the issuance of conventional mortgages in Azerbaijan is 50,000 manat, at a rate of 8 percent for 25 years. But the amount in the social mortgage is 35,000 manat, at an annual rate of 4 percent and a 30-year term. The initial fee for ordinary and concessional loans is 15 percent, for ordinary loans - 20 percent.
Terms of mortgage lending are as follows: loans must be issued in the national currency with manats and only to Azerbaijani citizens, and an object of the mortgage can only be an apartment or private house; volume of mortgage lending must not exceed 85 percent of the market price; monthly payment for a loan must not exceed 70 percent of a debtor's monthly income; an agreement on life insurance must be shown and other conditions.
Preferable conditions are granted to members of families of war victims, families of national heroes, internally displaced persons, civil servants with at least three-years experience, doctors of philosophy and doctor of philosophy candidates, persons making special contributions to sport and military personnel with at least a three-year term of service. Each family having the right to a lax mortgage loan is only eligible to receive it once.
Azerbaijani Mortgage Fund was established as a PSE in September 2005 by an Azerbaijani presidential decree. Its charter was approved by a separate presidential decree in December 2005. The AMF's main purpose is to create funding mechanisms which provide home ownership to Azerbaijani citizens through long-term financing, and to attract domestic and foreign investment into mortgage financing.
The official exchange rate is 0.7911 manat to $1 on May 10.