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Growth of mortgage lending in Azerbaijan to be moderate in 2012

Business Materials 7 December 2011 16:31 (UTC +04:00)

Azerbaijan, Baku, Dec 7 /Trend E.Ismayilov/

The budget of the Azerbaijan Mortgage Fund (AMF) under the auspices of the Central Bank is expected to increase moderately in 2012, the CBA chairman Elman Rustamov told journalists on Wednesday.

"We discussed AMF 2012 budget yesterday, but as of now a final decision on the volume of a new bond issue wasn't made," Mr Rustamov said. "I think that we will take it at a more moderate pace, due to the macroeconomic situation."

Mr Rustamov noted that the AMF has capital reserves, but its portfolio will increase by an additional allocation of mortgage bonds in the future, creating its own capital base in the form of mortgages, which will be reproduced.

"However, we are looking for other ways to raise funds for mortgage lending in the country," he added.

Mortgage loans totalling 335.78 million manat was granted from 2006 to Dec 1, 2011. The total amount of refinancing loans which the banks previously issued amounted to 67.87 million manat for 11 months. Thus, 17.89 million manat has been allocated since the beginning of the year out of 20 million manat provided to finance the social mortgage through the 2011 state budget.
Conventional mortgages are financed by placing mortgage bonds. The AMF has placed bonds worth 74 million manat during January-November.
Youths and young families account for 72 per cent of total loans (41 per cent of borrowers are aged 18-29 years, 31 per cent - 30-35 years old) and 28 per cent of loans accounted for borrowers over 36 years.
The maximum amount of regular issuance of mortgage in Azerbaijan by the AMF for today is 50,000 manat at the rate of eight per cent and the maximum term is 25 years. Under the social mortgage it is 35 manat at an annual rate of four per cent and the term is 30 years. The initial payment under the social mortgage is 15 per cent, while for conventional loans is 20 per cent.
The mortgage lending terms are as the follows: loans must be issued in the national currency, manat, and only to Azerbaijani citizens and type of building being financed by the mortgage can only be an apartment or private house.

The volume of the mortgage lending must not exceed 80 per cent of the market price and the monthly payment for a loan must not exceed 70 per cent of the debtor's monthly income, as well as presence of an agreement on life insurance.

Preferable conditions are granted to members of families of war victims and 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 the armed forces 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.

There are 26 authorised banks of the Mortgage Fund, 19 insurance companies and 13 appraisal organisations operating in the mortgage market.
The official exchange rate on December 7 is 0.7865 AZN / USD.

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