Housing finance volume increases by almost 20 percent in Azerbaijan per year

Business Materials 27 March 2014 18:20 (UTC +04:00)

Baku, Azerbaijan, March 27
By Abbas Akhundov - Trend:

Loans amounting to 2.5 million manat were delivered through the Azerbaijan Mortgage Fund (AMF) under the Central Bank of Azerbaijan (CBA) in January 2014, or 19 percent more than the volume of financing as of January 2013, according to the CBA's statistics report.

Mortgage loans worth over 535 million manat have been issued through the AMF since the beginning of the financing.

The total amount of refinancing loans issued by the banks earlier reached 9.9 million manat in January. The AMF placed bonds to the amount of five million manat in the reporting month, according to the report. Proceeds from placing the bonds are spent to finance conventional mortgages.

Some 40 million manat were envisaged to finance the social mortgage in the state budget-2014.

The average amount issued by the AMF authorised banks is 39,513 manat, the average loan amount is 278 manat, interest rate - 6.88 percent and average monthly payment - 319.8 manat in January.

Around 72 percent of the total volume of given loans, that is 39 percent of borrowers aged 18-29 and 33 percent at 30-35 years old, fell to young people and families. Around 28 percent of the loans fell to borrowers over 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 the social mortgage is 15 percent, whilst the 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 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 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 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 March 27.

Translated by NH
Edited by SM