Baku, Azerbaijan, Nov. 14
By Emin Aliyev - Trend:
The mortgage lending policy is one of the priorities of the Central Bank of Azerbaijan (CBA) and it is on the spotlight of the government, chairman of the Central Bank Elman Rustamov said today while discussing the draft state budget-2014.
According to him, the strategy is being prepared in the field of mortgage lending.
"It was correctly pointed out earlier that it is necessary to be objective and recognize that the increase in funds allocated to the Azerbaijan Mortgage Fund (AMF) from the state budget from 40 to 50, 100, 200 million manat, will not solve the problem. Mortgage is a mechanism of meeting the demand for housing which remained unresolved from the Soviet period. It is incorrect to transfer this burden to the state budget. This does not correspond to the country's economic doctrine. The proposals about large-scale construction of apartments through oil revenues also do not correspond to the market economy principles and the economic development strategy of the country."
Allocating one-two billion manat is not a problem, but at the same time this is not a solution to the problem of providing citizens with housing, he said.
"We see a solution to the problem in the public- private partnership," he said. "The country's role in this partnership is that affordable and comfortable apartments must be built. The cheaper the apartments are, the bigger the intervention in the market will be. This can be implemented either through the state or the stimulation of private initiative. At present, the Central Bank is examining the international experience in this field. It is in the process of forming a strategy."
According to him, it is necessary to establish the private organizations which will be interested in providing the banks with long-term funds or subsidizing the interest on mortgage loans.
"We are discussing this issue with the Ministry of Finance," he said. "Moreover, we see the citizens' role in this partnership in their participation in the construction savings banks on the model of post-war Germany, which has proved its effectiveness. This is a very interesting approach when the population's deposits will be automatically mortgage loans. This model has proven its viability. It will be discussed soon."
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 percent with a payback period of 30 years. The initial payment under the social mortgage is 15 percent, whilst the conventional loan is 20 percent.
The official exchange rate is 0.7843 AZN/USD on Nov. 14.