Average period of loan grows in Azerbaijan

Business Materials 12 December 2017 17:20 (UTC +04:00)

Baku, Azerbaijan, Dec. 12

By Anvar Mammadov – Trend:

Azerbaijan Mortgage Fund (AMF) issued loans worth 18.6 million manats in October 2017, according to the report of the Central Bank of Azerbaijan (CBA).

The issuance of mortgage loans was suspended in the same period last year due to the restructuring of the AMF.

According to the CBA report, in October 2017, the volume of refinancing of loans issued by banks earlier amounted to 14.4 million manats. Since the beginning of the year, 40 million manats has been transferred from the state budget to the AMF.

The average monthly amount of the loan delivered by the AMF’s authorized banks was 43,915.1 manats in October 2017 (40,882.6 manats in October 2016). The average period of the loan is 281 months (280 months a year earlier). The average annual interest rate is 6.64 percent (6.7 percent a year earlier). The average monthly amount for payments is 313.5 manats (295.7 manats a year earlier).

In general, AMF’s authorized lending institutions have issued 20,859 mortgage loans worth 915.14 million manats since 2006 and up till now.

According to the new mortgage loan issuance order, approved in June 2016, an ordinary mortgage loan will be issued only to Azerbaijani citizens and only in the national currency for a term from 3 years to 25 years, while preferential mortgage - up to 30 years to purchase a house, owned by the citizen. Interest rates on conventional mortgage must not exceed eight percent, while 4 percent per annum in preferential mortgage loan.

The maximum amount of the mortgage loan (including preferential) is determined by Azerbaijan Mortgage Fund JSC and must not exceed the cost of repaired housing with an average of 100 square meters in zone #7 in Baku. Annual interest rates on the loan are determined by the company’s Supervisory Board.

The amount of preferential mortgage loan must not exceed 85 percent of the cost of purchased housing by the date of the loan issuance, except for cases when a borrower appeals to decrease the loan amount. The amount of conventional mortgage loan must not be less than 75 percent and more than 85 percent of the cost of purchased housing by the moment of the loan issuance, except for the cases when a borrower appeals to decrease the loan amount.

The monthly payment for a mortgage loan must not exceed 70 percent of a debtor's monthly income. The age of the borrower must not exceed the retirement age according to the legislation. An agreement on life insurance is required.

The family members of war victims, national heroes, internally displaced people, civil servants with at least a three years' experience, teachers of secondary schools with at least a five-year service term, PhDs, doctors of science and those having special merits in sport as well as the military with at least a three-year service term can use the preferential conditions. Each family having the right to such a mortgage loan can use it only once.

Around 24 out of 31 banks in the country, as well as 16 insurance companies [in total 21] and 11 appraisal organizations are the authorized banks of the Azerbaijan Mortgage Fund.

(1.7 manats = 1 USD on Dec. 12)