PremiumAzerbaijan has lowest mortgage rates in region

Baku, Azerbaijan, March 31
By Emin Aliyev - Trend:

Interest rates on mortgage loans are lower in Azerbaijan than in other countries of the region, a survey by the KPMG Global Audit Company said. It was conducted at the request of the Georgian National Bank in March.

In particular and in accordance with the survey's results, the weighted average nominal interest rate on mortgage loans in the national currency with a fixed rate makes up 10.5 percent in Azerbaijan. For comparison, the figure is 16.3 percent in Armenia, 15 percent -Georgia and 12.4 percent in Kazakhstan.

As to the actual annual percentage rate (AAPR), given all the associated costs for the loan, its average size on mortgages in the national currency is also lower in Azerbaijan than in neighbouring markets, making up 12.4 percent. For comparison the said rate equals 18.2 percent in Armenia, 16.9 percent in Georgia and 13.4 percent in Kazakhstan.

The following table summarises the weighted average fixed-rate mortgage loans in local and foreign currency:

The Azerbaijani banks do not offer mortgage loans in foreign currency, according to the report.

'Furthermore, a mortgage with a floating rate is unpopular in the banking sector of Azerbaijan, Armenia and Kazakhstan. A floating rate in Georgia, Armenia and Kazakhstan is tied to the refinancing rate determined by the central banks of these countries', the document said.

The lowest rate for this type of loan is established in Georgia. Georgian banks do not offer mortgage loans with a floating rate in freely convertible currency. The highest rates on such loans are recorded in Armenia.

The following table summarises the weighted average floating interest rates on mortgage loans in local and foreign currency:

Translated by S.I.
Edited by S.M.