Azerbaijan will determine new terms of mortgage lending by late 2013
Azerbaijan, Baku, August 2 / Trend, A. Akhundov /
The Azerbaijani government will determine the new terms of mortgage lending by the end of the year, deputy chairman of board of the Central Bank of Azerbaijan (CBA) Khagani Abdullayev said at a press conference on Friday.
He said that the Central Bank and the government of the country are examining various models for changing the conditions and will finalize the package of proposals by late 2013.
In this process, the central bank has two main objectives. The first is to cover the demand of the population in the social and commercial mortgages, the second - in maintaining security of the banks' mortgage portfolio.
"Until now, we had no problems with mortgage portfolio security, these risks are effectively managed," he said. "Our goal is to maintain this balance."
Mortgage loans worth 481.35 million manat were delivered in 2006-2012 through AMF (61.16 million manat in Jan.-June 2013, 74.77 million manat - in 2012, 95.64 million manat - in 2011, 97.08 million manat - in 2010, 76.9 million manat - in 2009, 70.2 million manat - in 2007, 5.6 million manat - in 2006).
Currently, the maximum amount of a common mortgage loan through the AMF is 50,000 Manat at a rate of 8% with a payback period of 25 years. Terms under the social mortgage it is 50,000 Manat at an annual rate of 4% with a payback period of 30 years. The initial payment under the social mortgage is 15%, whilst the conventional loan is 20%.
Conditions of mortgage lending are as follows: loans must be issued in Azerbaijani Manats and only to Azerbaijani citizens and the mortgage can only be for an apartment or private house. The volume of mortgage lending must not exceed 80% of the market price and the monthly payment must not exceed 70% of the debtor's monthly income. It is compulsory to take out an agreement on life insurance.
Preferential conditions are granted to family members of war victims, national heroes, internally displaced persons, civil servants with at least a three years' experience, PhDs, those making special contributions to sport as well as to the military with at least a three-year service term. Each family having the right to such a mortgage can only use the opportunity once.
There are 28 authorized banks belonging to the Mortgage Fund, 21 insurance companies and 11 appraisal organizations, all are participants of the mortgage market.
The official exchange rate is 0,7845 AZN/USD on August 2.