Final Agreements on Social Mortgage Credit Proposals Prepared

Business Materials 26 October 2006 12:30 (UTC +04:00)

Next week the Government is expected to hold final discussions regarding the proposals on social mortgage. The delay in its process has been linked with the study at length on experiences in Russia, Ukraine, Kazakhstan and European countries in the application of social mortgage, the Executive Director of Azerbaijan Mortgage Fund who is operating under the Azerbaijan National Bank, Faik Mammadov told Trend. Several amendments have been made to the proposals.

I believe that by the end of the year it will be possible to begin financing of the social mortgage. After final discussions at the Cabinet of Ministers of Azerbaijan, the next step is to present the proposals to the Presidential Administration for its consideration at a higher level, said the Head of Azerbaijan Mortgage Fund (AMF).

The social mortgage will be offered to young families and military personnel. Selection criteria will be defined for the young families wishing to upgrade their living conditions, with a preference given to young families with a low revenue. As the Government's present priority is also to develop the regions of the Government (western and border part of the republic), the residence may also be given preference.

According to the proposals, the period of providing mortgage credits is intended to be increased from the current 15 years to 30 years. The maximum amount of credit also may be increased (present amount is AZN 30.000). For the banks to decrease the interest rates for the mortgage credits will depend upon the margins, which should be kept separate from the quotation rates.

It is profitable for banks to maintain the margins at 4-5%. However, the expected decrease of the quotation rates that has been defined in volume of 6% today may also influence the interest rates for the mortgage credits. Taking into consideration the settlement of the administrative and operation expenditures, the quotation rates may decrease to 2%. But it does not mean that it will be decreased precisely at this level, Mammadov stated.