Azerbaijan, Baku, Aug.10 / Trend I.Khalilova /
Mortgage lending in Azerbaijan is growing and the authorized lending organizations of the Azerbaijani Mortgage Fund (AMF) under the Central Bank, received over 100 appeals for mortgage worth 4 million manat in five working days of August, the Fund said on Aug.10.
The fund issued more than 70 mortgage loans worth 3 million manat in this period, the fund added.
The total amount of mortgage financing has exceeded 20 million manat over the past two months of 2009, including the July issue of mortgage loans amounting to over 16 million manat, while in 2006 the lending amounted to 5.6 million manat.
The AMF issued loans for a long term and at low interest rates. Average term of the loan was 24 years and average interest rate was 7.6 percent per a year.
The Fund issued mortgage loans worth 75.8 million manat in 2006-2007, which enabled to solve housing problems of 2,000 families.
However, favorable terms of mortgage loans increased demands. As a result, the funds allocated from the public budget dried up and the process of issuing mortgage loans was suspended in June 2007. It was renewed only in June 2009. A large package of demand for mortgage loans appeared over the past two years, boosting appeals to the authorized loan organizations for two months.
The AMF issues mortgage loans through drawing funds. The Fund issued secured bonds worth 55 million manat, for a period of seven years and under three percent of interest per year. The bonds worth 25 million manat of total bonds have already been placed. Currently, the bonds proposed by the Fund in terms of profitability (3 per year) are attractive for investors compared to other existing securities in the market.
Therefore, demand for bonds exceeded supply at the auctions on placement of the Fund's bonds held on June 16, July 14 and July 27. Though the AMF registered bonds with a nominal rate of 55 million manat in the first stage, the volume of funds attracted will be increased due to such demand.
The Fund defined loan limits for authorized banks to remove differences between existing funds and granted loans. The Fund set limits for each bank, taking into account the potential of the bank, its clientele base and prudential regulations. At present, banks in view of its liquidity and managing the risks posed by the mortgage loans, receive applications and issue loans in accordance with the limit.
Mortgage lending in Azerbaijan is going well and the fund intends to undertake a number of activities to continue the mortgage lending in future, the fund said.
The maximum sum of common mortgage loans in Azerbaijan amounted to 50,000 manat under 8 percent per year for the term of 25 years, social mortgage to 35,000 manat under a 4 percent per year for 30 years. Initial payment for common and lax loans is 15 percent.
In connection with the launch of mortgage loans, 17 banks, 7 appraisal companies and 10 insurance companies authorized by the AMF were approved.
Conditions of the mortgage lending are as the following: loans must be issues in the national currency with manats and only to Azerbaijani citizens, and an object of the mortgage can only be an apartment or private houses, volume of the mortgage lending must not exceed 85 percent of the market price, monthly payment for a loan must not exceed 70 percent of debtor's monthly income, as well as presence of an agreement on life insurance and others.
Preferable conditions are granted to members of families of war victims, families of national heroes, internally displaced persons, civil servants with at least a three-year experience, candidates PhD and PhD, persons making special contributions to sport, as well as militaries with at least a three-year service term.
Each family having the right to a lax mortgage loan can use this chance only for one time.
The 2005-2009 public budget of Azerbaijan envisages 94 million manat for mortgage loans through the Mortgage Fund, with over 70 million manat distributed through banks.
The 2009 public budget has allocated 14 million manat to finance social mortgage lending.
On Aug.10, the official exchange rate is 0.8043 manat to $1.
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