National Mortgage Company of Armenia will start provide housing loans at substantially lower mortgage rates as it gets the backing of the government. Now the company will provide long term loans and lower it's current mortgage rates to boost the market. The culture of taking a mortgage to finance a house is relatively young in Armenia. However, amazingly, Armenia has developed a strong banking system and now became a leader in the region providing long term mortgages of 10 and 15 years.
According to Mediamax news agency the Executive Director of the National Mortgage Company (NHC) of Armenia Mher Yedigaryan informed that the first bank, which has received refinancing to provide mortgage loans is “Armbusinessbank”.
Presenting the plan of how the new mortgage lending structure will operate the head of the Central Bank of Armenia Artur Javadyan stated that financial organizations, which cooperate with the National Mortgage Company, after providing mortgage loans and meeting NHC standards, may submit applications to the latter on refinancing the given loans. This will allows financial organizations to secure constant growth of their mortgage portfolio.
Banks and mortgage companies should transfer the repayments of refinanced loans to NHC, as well as pay it 9% annually for refinancing.
“After the assets of the Company are formed at the proper level, NHC will start attracting additional means from the market by means of bonds issue”, Artur Javadyan stated. He added that there are also talks held with foreign investors, who have expressed wish to participate in the authorized capital stock of the Company, as well as provide it long-term loan means at low interest rates. For example, Germany disposes 20 million euros through “KfW” bank to Armenia for the development of the mortgage market, the President of Central Bank Arthur Javadyan told the reporters at news conference today.
Talking about mortgage loan standards, established by NHC, CB Head stated that loans at the volume of up to 20mln and issued at the term of minimum prepayment of 30% from the real estate cost will be refinanced. Artur Javadyan stated also that priority will be given to loans, issued at low mortgage interest rates.
“NHC activity will allow lowering the current mortgage rates by a few percentage points and prolong the loan repayment terms”, Artur Javadyan stated. Banks, which receive refinancing in Armenian drams, will be relieved of currency fluctuation risks.
According to CB Chairman, almost all Armenian bans will be provided the right to get the financial support of mortgage refinancing to boost the market. In a few months credit organizations will be provided with the same support as well.
The founder and the only owner of NHC is the Central Bank of Armenia. Think of it as Freddie Mac or Fannie Mae. The National Hypothec Company was registered on June 16 with the authorized capital stock of 5bln AMD.
Artur Javadyan reminded that by the recent decision of the government, 12bln AMD were allocated for NHC from the Russian stabilization loan. Current rates of AMD vs. U.S. dollar is 366 AMD per one dollar.
Written by Armen Hareyan. Materials from Mediamax.am and Panorama.am are used in this story.
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