Baku, Azerbaijan, Nov. 7
By Emin Aliyev - Trend: Administrative measures will not be effective in reducing the cost of mortgage loans in Azerbaijan, Azerbaijani Minister of Finance Samir Sharifov said on Wednesday.
The mortgage is being financed in Azerbaijan through the Azerbaijan Mortgage Fund, the social mortgage through the state budget, while conventional is through the funds from the placement of mortgage bonds, as well as within the banks' own mortgage programmes.
"The Central Bank of Azerbaijan (CBA) only sets the refinancing rate of banks," the minister said on Wednesday while responding to a question about the availability of mortgage loans in the country. "The commercial banks set their own interest rates on mortgage loans which are several times higher than the rate."
While speaking about the social mortgage, Sharifov stressed that the CBA is working towards simplifying the conditions for issuing these loans, as the AMF operates under the Central Bank.
"We live in terms of the market economy," he said. "The government will not impact the situation by administrative measures because it is impossible. For example, there is the National Entrepreneurship Support Fund which issues concessional loans. This affects the market and lowers the rates on loans for business which must not exceed six per cent per annum. Perhaps, one can achieve a decrease in the cost of mortgage loans in Azerbaijan by using the same method."
Currently, the maximum amount of a common mortgage loan through the AMF is 50,000 manat at a rate of eight per cent with a payback period of 25 years. Terms under the social mortgage are 50,000 manat at an annual rate of four per cent with a payback period of 30 years. The initial payment under the social mortgage is 15 per cent, whilst the conventional loan is 20 per cent.
Around 456 million manat has been raised to finance 12,860 loans delivered through the Azerbaijan Mortgage Fund (AMF) under the Central Bank of Azerbaijan (CBA) since its establishment.
There are 31 authorised banks belonging to the Mortgage Fund. Around 21 insurance companies and 11 appraisal organisations are participants of the mortgage market.
The official exchange rate is 0.7843 AZN/USD on Nov. 7.