Mortgage lending reduced in Azerbaijan
By Nigar Orujova
Mortgage lending decreased in the first half of 2015 in Azerbaijan, the Central Bank reports.
The Azerbaijan Mortgage Fund granted loans amounting to 56.5 million manat in January-June, which is 12 percent less than the same period in 2014.
The report shows that the AMF issued loans totaling 9.5 million manat in June, which is 18.75 percent more than the 8 million in loans issued in June of last year.
During this past June, the total amount of refinancing loans issued by banks earlier amounted to 37.8 million manat.
The average monthly amount of credit issued in this period by authorized banks amounted to 40,584 manat, while this figure was 39,891 manat in June 2014. The average loan term was 279 months (278 months in 2014), while the average annual interest rate stood at 6.73 percent (against 6.83 percent a year earlier), and monthly payments averaged around 297.4 manat (318.6 manat last year).
The state budget transferred 4.7 million manat to the AMF in this June.
To date, the AMF issued mortgages for more than 698.78 million manat, 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 manat in 2007, and 5.6 million manat in 2006.
The maximum size of a conventional mortgage at the AMF is 50,000 manat with a down payment of 20 percent, at a rate of eight percent and a term of 25 years. The social mortgage grants 50,000 manat to the borrower, at an annual rate of four percent and a term of 30 years, with a down payment of 15 percent.
Mortgages are issued to Azerbaijani citizens in manat only. The subject of the mortgage can only be an apartment or private house and the amount of mortgage loan should not exceed 80 percent of the market value of the property.
The monthly payment for a loan should not exceed 70 percent of the monthly income of the borrower.
Preferable conditions are granted once to members of families of war victims, families of national heroes, internally displaced persons, civil and military servants, PhDs, professional athletes, etc.
It is mostly young families that take interest in obtaining mortgages in Azerbaijan. Over 67 percent of mortgage contracts were signed to married couples in 2014. Single young people under 30 signed 37.9 percent of the agreements.
This year, the state plans to send 50 million manat from its budget toward the issuance of social mortgages, 25 percent higher than the amount of funding for 2014.
By 2016, the total amount of funds allocated from the state budget to AMF is expected to reach 266 million manat.
The country Mortgage Fund, which was created in 2005, aims to create a mechanism that will provide the population with housing through long-term mortgage lending, as well as assist in attracting foreign and local financial resources to mortgage lending.
To date, more than 30 banks, 16 appraisal companies, and 21 insurance companies are authorized agents of the AMF. Since the start of funding, the organization granted mortgage loans in the amount of over 636 million manat to more than 15,900 people.
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Nigar Orujova is AzerNews’s staff journalist, follow her on Twitter: @o_nigar
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