Azernews.Az

By Aynur Jafarova

Azerbaijan will achieve macroeconomic stability and low inflation rate by the end of this year.

The news was announced by Head of the Central Bank of Azerbaijan (CBA) Elman Rustamov on May 10.

"Inflation in the country is at its lowest level now," Rustamov told journalists on May 10. "At the end of the first quarter, the inflation rate in the country stood at two percent. At the same time we are pursuing the policy of reducing the interest rates in Azerbaijan."

He also noted the interest rate needs to be reduced.

"They should be reduced to such a level that is suitable both for population and business sector," the CBA head stressed.

The International Monetary Fund (IMF) forecasts Azerbaijan's inflation would remain at the level of 3.5 percent in 2014 while the European Bank for Reconstruction and Development (EBRD) predicts this figure will reach 3.8 percent.

Rustamov went on to add that the draft mortgage strategy has been prepared and submitted to the Azerbaijani government.

"The mortgage strategy covers all the proposals, including those regarding the savings construction banks, building affordable housing on special conditions and other mechanisms. We will be able to start its implementation immediately as soon as the document is approved," he said.

The CBA head didn't specify a timeframe for the document's possible adoption.

Rustamov said the regulator supports the formation of a single mortgage policy in the country.

"We believe that a unified approach, a unified strategy is the best decision, because any housing initiatives and programs ultimately spill into the financial sector. All these issues should be resolved under a single strategy," Rustamov stressed.

Citizens are provided mortgage loans through the Azerbaijan Mortgage Fund. According to the terms of mortgage lending through the Azerbaijan Mortgage Fund, the maximum amount of a mortgage is 50,000 manats (US $1 is 0.7843 manat), which is provided for 25 years at 8 percent per annum. Social mortgage is also equal to 50,000 manats and is issued for 30 years at 4 percent per year. The down payment under a social mortgage is 15 percent and that of a regular mortgage is 20 percent.

According to the mortgage terms, loans must be issued in the national currency, manat, and only to the citizens of Azerbaijan; the subject of a mortgage can only be an apartment or a private house; the amount of the mortgage should not exceed 80 percent of the market value of the property; the monthly payment for a loan must not exceed 70 percent of the monthly income of the borrower; an agreement on life insurance is necessary as well.

Preferable conditions are granted to members of the families of war victims, families of National Heroes of Azerbaijan, internally displaced persons, civil servants with experience of no less than three years, PhD degree holders, people with special achievements in sports, as well as servicemen with experience of no less than three years. Every family, which has the right to a lax mortgage loan, can use it only once.