Mortgage lending decreases in Azerbaijan

Business Materials 4 September 2015 20:30 (UTC +04:00)

Baku, Azerbaijan, Sept. 4
By Azad Hasanli - Trend:

The Azerbaijan Mortgage Fund (AMF) under the Azerbaijani Central Bank delivered loans amounting to 65.2 million manat in January-July 2015 or 2.25 percent less than in the same period of 2014, the Central Bank of Azerbaijan's report as of January-July 2015 said.

The loans worth 8.7 million manat were delivered through AMF in July, which is 45 percent more than in July 2014 (six million manat), the report said.

The total amount of refinancing the loans issued by the banks earlier amounted to 48.9 million manat in July 2015.

Some 29.2 million manat of 50 million manat envisaged for this year have been allocated for social mortgage since early 2015. Some 5.3 million manat were transferred from the state budget to the AMF in July 2015.

The total volume of placing the mortgage bonds amounted to 31 million manat in January-July. These funds are used to finance the ordinary mortgage.

The average amount issued by AMF authorized banks is 40.698 manat (this figure amounted to 39.944 manat in July 2014), the average term of loan issue - 279,7 months (278 months), the average interest rate is 6.72 percent (versus 6.82 percent in 2014), and the average monthly payment is 297.5 manat (318.7 manat).

Some 17,374 mortgage loans worth more than 702.4 million manat have been delivered up till now through the fund, including 97.1 million manat in 2014, 112.9 million manat in 2013, 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 AZN - in 2007 and 5.6 million manat - in 2006.

Currently, the maximum amount of a common mortgage loan through the AMF is 50,000 AZN at a rate of 8 percent with a payback period of 25 years. Terms under the social mortgage are 50,000 AZN 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 AZN 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 30 banks (some 43 banks operate in the country).

Some 21 insurance companies [their total number is 26] and 16 appraisal organizations are the participants of the mortgage market.

The official exchange rate is 1.0486 AZN/USD Sept. 4.

Edited by CN