Mortgage lending reaches record volumes in Azerbaijan in 2013

Business Materials 6 February 2014 18:32 (UTC +04:00)

Baku, Azerbaijan, Feb. 6
By Emin Aliyev - Trend:

In 2013, the Azerbaijan Mortgage Fund (AMF) under the Azerbaijani Central Bank delivered loans amounting to 112.9 million manat, or 50.1 percent more than the volume of financing in 2012, the Azerbaijani Central Bank's statistics report said on Feb. 6.

Mortgage loans worth 533.09 million manat have been delivered since launching financing through the AMF, including 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 and 5.6 million manat - in 2006.

The total amount of refinancing the loans delivered by the banks earlier hit 86.9 million manat in 2013, according to the report.

The AMF placed bonds worth 57 million manat since the beginning of the year.

The funds from placing these bonds are spent to finance conventional mortgages.

Some 40 million manat were allocated from the state budget to finance the social mortgage in 2013.

The average amount issued by AMF authorized banks is 39,474 manat, the average loan amount - 278 manat, interest rate - 6.88 percent, the average monthly payment - 319.9 manat.

Around 72 percent of the total volume of given loans, that is 39 percent of borrowers aged 18-29 and 33 percent - 30-35 years-old, fell to young people and families. Around 28 percent of the loans fell to borrowers older than 36.

Currently, the maximum amount of a common mortgage loan through the AMF is 50,000 manat at a rate of eight percent 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 a social mortgage is 15 percent, whilst a conventional loan is 20 percent.

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 percent of the market price and the monthly payment must not exceed 70 percent of the debtor's monthly income. It is compulsory to have 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 and 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 31 authorized banks belonging to the Mortgage Fund. Around 21 insurance companies and 11 appraisal organizations are participants in the mortgage market.
The official exchange rate is 0.7843 AZN/USD on Feb. 6.

Translated by NH
Edited by CN