ArmInfo.The banks' assessment of the mortgage lending risks is quite adequate in the context of softening of the housing acquisition contract terms, Hayk Voskanyan, Director of the National Mortgage Company (NMC) UCO, said at a press conference on May 19. He noted that the extension of the redemption period may result in accumulation of surplus payments of interest rates.
Concerning the reduction in the current interest rates, the expert said: "If we soften the mortgage lending terms and conclude contracts with everyone who needs housing or wants to improve the hosing conditions, we will increase the share of NPLs to 20%, which I think is inexpedient". In this light, he added that the current terms of mortgage contracts are the key to stability of the financial- banking system of the country. Voskanyan said that the average amount of NMC-refinanced mortgage loans is 8.3 mln AMD at the average interest rate of 12.7%, with the redemption period being 13 years. In this light, he added that in May 2015 a decision was taken to increase the maximum amount of a mortgage loan from 20 mln AMD to 25 mln AMD. At the yearend of 2015, the company increased lending by 1.7 bln AMD and completed the year 2015 with a 38% growth.
He noted that over 7 years of activities, NMC refinanced mortgage loans worth 60 bln AMD, with 65% of the contracts concluded in Yerevan and 35% in the provinces of Armenia. To note, National Mortgage Company UCO was founded on 16 June 2009 by the decision of the Central Bank of Armenia to refinance mortgage loans. As of 1 April 2016, the total amount of the mortgage loans refinanced by NMC was 40.3 bln AMD ($83.8 mln), with a 17.7% year-over-year growth. As of 1 April 2016, the assets of the NMC totaled 40.7 bln AMD (with 99% being the lending), the total capital was 18.4 bln AMD, and the net profit in Q1 2016 amounted to 317.4 mln AMD (up 33% versus Q1 2015). According to the Financial Rating of Armenian Banks by the Agency of Rating Marketing Information (ArmInfo), as of 1 April 2015, the share of mortgage lending in the aggregate loan book of the banks was 8.1% versus the pre-crisis 12.4% (as of 1 April 2008). In the banking system, the mortgage lending totaled 175.1 bln AMD or $371.6 mln, with a 20.2% year-over-year growth.
To note, all Armenian banks are engaged in the mortgage market, along with four credit companies - First Mortgage Company, Fides, National Mortgage Company, Affordable Housing for Young Families, with the last two refinancing the mortgage loans of other participants of the financial market. These four credit companies inclusive, the total mortgage portfolio on the financial market is 274 bln AMD or $581.4 mln. In 2008-2014, the interest rate of mortgage loans dropped from 16% to 12%. The USD mortgage loans that were expensive before the crisis have now the same price as the AMD mortgage loans.