Azernews.Az

The Azerbaijani government`s inability to resume mortgage crediting could lead to adverse consequences, a local expert has warned.
Head of the Economic and Social Development Center, Vugar Bayramov, said the delays were taking place in the backdrop of rising prices for apartments in the capital Baku. He said that according to official projections, a 25% increase in prices is expected in the domestic real estate market by the end of 2008. As a result, the chances for buying apartments under mortgage loans are dwindling. Moreover, borrowers will have to incur higher costs.
"From this standpoint, if the allocation of mortgage loans had started on time, low-income citizens and the middle class would have gained the opportunity to use these credits. But since the process is stalling, the price increases will allow only the well-to-do people to benefit from such loans."
Under the presidential decree of January 2007 on the allocation of concessional mortgage loans, such credits were disbursed in the maximum amount of 35,000 manats ($42,000) for three to 30 years, with the 4% annual interest rate. The allocations which were suspended in late 2007 have not resumed yet although the central bank had issued a statement saying the disbursals would begin in the second half of 2008.
The expert noted that the delay causes decreasing public interest in mortgage loans.
"Whereas mortgage loans were one of the hottest economic issues several months ago, the issue is now ceasing to be topical, although the allocation of such loans should be considered quite a major project given the rising demand for apartments [in the country]."