Mortgage lending volumes increase by third in Azerbaijan during year

Business Materials 6 June 2014 17:21 (UTC +04:00)

Baku, Azerbaijan, June 6

By Zulfiyya Qurbanova - Trend:

In January-April 2014, the Azerbaijan Mortgage Fund (AMF) under the Azerbaijani Central Bank delivered loans amounting to 42 million manats, or 30.8 percent more than the volume of financing compared to the same period of 2013, the Azerbaijani Central Bank's statistics report said.

Mortgage loans worth 575.09 million manats have been delivered since launching financing through the AMF, including 112.9 million manats in 2013, 74.77 million manats - in 2012, 95.64 million manats - in 2011, 97.08 million manats - in 2010, 76.9 million manats - in 2009, 70.2 million manats - in 2007 and 5.6 million manats - in 2006.

The total amount of refinancing of loans delivered by the banks earlier, hit 38 million manats in January-April 2014, according to the report.

The AMF placed bonds worth 5 million manats since the beginning of the year.

The funds from placing these bonds are spent to finance conventional mortgages.
Some 10 million manats were allocated from the state budget to finance the social mortgage during this period, according to the report.

Some 40 million manats will be allocated for these purposes this year.

The average amount issued by AMF authorized banks is 39,749 manats, the average loan amount - 278 manats, interest rate - 6.85 percent, the average monthly payment - 319 manats.

Currently, the maximum amount of a common mortgage loan through the AMF is 50,000 manats at a rate of 8 percent with a payback period of 25 years. Terms under the social mortgage are 50,000 manats at an annual rate of 4 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.

At present, the authorized banks of the Mortgage Fund are 28 banks [some 44 banks operate in the country].

Some 21 insurance companies [their total number is 28] and 14 appraisal organizations are the participants of the mortgage market.

The official exchange rate is 0.7843 AZN/USD on June 6.

edited by CN