Wednesday, September 13 2017 17:17
Alexandr Avanesov

In Armenia, the institution of presentation of mortgage for mortgage lending will be liberalized

In Armenia, the institution of presentation of mortgage for mortgage lending will be liberalized

ArmInfo. The National Assembly of Armenia at the meeting on September 13 began discussions on the draft amendments to the Law on Housing Mortgage Lending and a package of related laws.

According to the deputy chairman of the Central Bank of Armenia Nerses Yeritsyan, the bill passed two readings during the previous session of the parliament, but did not pass the third and final one.  For this reason, the government deemed it necessary to re-submit the document on first reading.

The presented package is aimed at protecting the interests of the population that has attracted mortgage loans in order to improve housing conditions. Previously, as N. Nersisyan continued, the law "On Protection of Consumer Rights" was adopted, which contradicts the current law "On Housing Mortgage Lending". In this connection, it was decided to resolve this issue in a separate order. First of all, we are talking about increasing transparency in the implementation of transactions. The consumer should be aware of the essence of the contract he signs, at which interest rate he attracts a loan taking into account all costs, penalties and pennies. This requirement is enshrined in the new bill.

Another requirement for the possibility of failure within 7 days from the date of signing the agreement on attraction of a mortgage loan, if the provisions of the contract, after studying the document recognized by the borrower unprofitable.

In order to increase confidence on the part of borrowers, it is envisaged to liberalize the institution of pledge presentation. If previously the consent of the first lender for the transfer of collateral to another bank was required, now this institution of consent is liquidated. It is also proposed to introduce a provision under which the borrower will be able to repay the loan early at any time convenient to him, without significant costs, transfer collateral for mortgage refinancing. This will enable borrowers to impose their conditions on credit institutions. After three years after the conclusion of the agreement, it is prohibited to use any kind of fines and pennies. At the end of this period, citizens of the country will have the opportunity to repeatedly refinance their mortgages. This, according to Nerses Yeritsyan, will form of the mortgage market shopping institution, including the interest rate.

Another provision concerns restrictions on fines and penalties. If the interest rate is set in the contract, then in calculating fines and pennies, the bank must have the ability to influence the interest rate. At a fixed interest rate, the amount of penalties and pennies should be reduced, and when floating, restrictions will apply, according to which the amount of fines and pennies should not exceed 0.2-0.6 percent of the loan amount. The package also clearly states the provision for determining the value of the property. If there is a good insurance history, the bank must take this into account. If the provisions of this legislation are violated, the bank will have to compensate the borrower for damage in the amount of 300 thousand drams.

N. Yeritsyan also said that in 2016 mortgage and other credit portfolios of commercial banks in Armenia increased by 15%, and the quality of loans also improved. In no other country in the world, the deputy head of the Central Bank continued, there was no such significant growth in the mortgage loan portfolio. He also said that at present young families have the opportunity to use mortgage loans at a rate of 6-8% for various groups. In total, the credit portfolio of commercial banks in the country exceeded $ 250 million, and the total portfolio of mortgage loans increased to $ 400 million, increasing every year in geometric progression.  This is a very serious indicator for Armenia, N. Yeritsyan believes, adding that the size of the interest rate largely depends on the volume of deposits. If 1% of the citizens' savings can be placed in commercial banks, then the interest rate will be 2%. Today, interest rates on deposits are quite significant, given costs and risks. Plus, the real estate market in crises is one of the most vulnerable, which increases costs. "There are no Santa Clauses, and no one will give cheap money for the distribution of mortgage loans." It is necessary to save, expecting that these savings will be invested in the economy of the country, from where the revenues will be received to provide mortgage lending," N. Yeritsyan said. He added that over the past year, the volume of deposits increased 20%, of which more than half were individuals. In total, we are talking about the growth of deposits for a total of 2 billion drams. Annually banks on deposits in the form of interest rates provide citizens of the country more than 140 billion AMD. The capital of commercial banks increased by 30% or 200 billion drams in 2016. Currently, the total capital of banks is about 670 billion drams, which, in turn, allows to increase assets.

According to the Central Bank of Armenia, according to the National Statistical Service's report for 2016, the volume of deposits in Armenian banks increased by 23.7% year-on-year to 2.413 trillion AMD ($ 5 billion). In their structure, traditionally foreign currency deposits prevail over AMD - 64.6% against 35.4%.  In particular, the currency component grew by 10.5% in 2016 - to 1.558 trillion - by 21.9% to 855.2 billion drams. Demand deposits accounted for 28.2% or 496.7 billion drams (an annual growth of 10.3%), while the share of term deposits accounted for 71.8% or 1.3 trillion. AMD (annual growth of 20.3%). The population's deposits in Armenian banks increased by 14.9% in 2016, exceeding 1 trillion drams. Interest rates on dram deposits decreased for the year 2016 from 14.06% to 9.82% on average. (The calculated exchange rate of AMD as of December 31, 2016 was 483.94 AMD/USD1).

POST A COMMENT
Input digits     


News
ZCMC paid unprecedented taxes in 2022, exceeding the figure of the previous year by almost two and a half times.ZCMC paid unprecedented taxes in 2022, exceeding the figure of the previous year by almost two and a half times.
Armenian NPP comments on Azerbaijani Human Rights Commissioner`s call Armenian NPP comments on Azerbaijani Human Rights Commissioner`s call 
Armenia`s IT sector rapidly developing - reps Armenia`s IT sector rapidly developing - reps 
Armenia, Qatar discuss opportunities for investment cooperation Armenia, Qatar discuss opportunities for investment cooperation 
44,929 more officially registered jobs in Armenia as against last  year44,929 more officially registered jobs in Armenia as against last  year
Italian businesses interested in Armenia`s investment environment Italian businesses interested in Armenia`s investment environment 
Vahan Kerobyan raises Artsakh issue at Global Forum on Food and  Agriculture in BerlinVahan Kerobyan raises Artsakh issue at Global Forum on Food and  Agriculture in Berlin
Corporacion America  CEO expresses readiness to increase investments  in ArmeniaCorporacion America  CEO expresses readiness to increase investments  in Armenia
Loss ratio in CMPTL market decreased from 79% to 66% in 2022 Loss ratio in CMPTL market decreased from 79% to 66% in 2022 
Armenian banks record 3-fold growth in net profit in 2022Armenian banks record 3-fold growth in net profit in 2022
901 transactions to amount of over AMD 56bln effected under economic  modernization programme in 2022901 transactions to amount of over AMD 56bln effected under economic  modernization programme in 2022
Armenia`s economy will not be able to withstand the expansion of  Turkish goods- EconomistArmenia`s economy will not be able to withstand the expansion of  Turkish goods- Economist
Armenia`s government to support hotels in Syunik, Vaiots DzorArmenia`s government to support hotels in Syunik, Vaiots Dzor
In Armenia, terms for removing arrest from citizens` accounts to be  reduced to 1-2 days from previous 7 days or moreIn Armenia, terms for removing arrest from citizens` accounts to be  reduced to 1-2 days from previous 7 days or more
Share of Armenia`s authorized capital in  EDB increased to 4.2291%,  while Russia`s stake in EDB decreased  to 44.7878%  Share of Armenia`s authorized capital in  EDB increased to 4.2291%,  while Russia`s stake in EDB decreased  to 44.7878%  
Armenia, Germany discuss number of issues on cooperation in economic  sectorArmenia, Germany discuss number of issues on cooperation in economic  sector
$350mln to invested in Zvartnots International Airport$350mln to invested in Zvartnots International Airport
Declaration of income: We have not achieved tax egalitarianism -  ExpertDeclaration of income: We have not achieved tax egalitarianism -  Expert
In Jan-Nov 2022, Armenian-Georgian trade turnover doubled compared to  2021, amounting to $759 million- PashinyanIn Jan-Nov 2022, Armenian-Georgian trade turnover doubled compared to  2021, amounting to $759 million- Pashinyan
Irakli Garibashvili announces about 70% increase in foreign trade  turnover with ArmeniaIrakli Garibashvili announces about 70% increase in foreign trade  turnover with Armenia
The beneficiary of The beneficiary of "The Power of One Dram" in January is the educational program "Talentum"
Fly Arna airline announces launch of new nonstop flights to Saint  PetersburgFly Arna airline announces launch of new nonstop flights to Saint  Petersburg
Vardan Aramyan: With the current quality and level of investments,  there is no need to talk about the growth of the economy`s potentialVardan Aramyan: With the current quality and level of investments,  there is no need to talk about the growth of the economy`s potential
Ministry of Economy of Armenia expects that ferry service to start  operating in Q1 2023Ministry of Economy of Armenia expects that ferry service to start  operating in Q1 2023
Armenia`s gross international reserves move down from historical highArmenia`s gross international reserves move down from historical high
Armenia`s tax revenues AMD 1,926bln in 2022Armenia`s tax revenues AMD 1,926bln in 2022
Robert Khachatryan: receiving station and satellite control center to  be put into operation during 2023Robert Khachatryan: receiving station and satellite control center to  be put into operation during 2023
Armenia extending restrictions on import of cement and clinkerArmenia extending restrictions on import of cement and clinker
New Year in Idram. results of 2022New Year in Idram. results of 2022
Ameriabank named Best Foreign Exchange Bank in Armenia by Global FinanceAmeriabank named Best Foreign Exchange Bank in Armenia by Global Finance
Economic growth in 2022 is not inclusive and leads to widening of  social gap - Luys FoundationEconomic growth in 2022 is not inclusive and leads to widening of  social gap - Luys Foundation
In 2022, social investments of Zangezur Copper-Molybdenum Plant  amounted to about 3.5 billion dramsIn 2022, social investments of Zangezur Copper-Molybdenum Plant  amounted to about 3.5 billion drams
Tariff for final consumers of electricity in Armenia will remain  unchanged in 2023Tariff for final consumers of electricity in Armenia will remain  unchanged in 2023
CBA to put into circulation new batch of 3rd generation thousandth  banknotes from January 23, 2023CBA to put into circulation new batch of 3rd generation thousandth  banknotes from January 23, 2023
Vahan Kerobyan: Unemployment rate in Armenia in 2023 will be below  10%Vahan Kerobyan: Unemployment rate in Armenia in 2023 will be below  10%
$56mln recovered to state budget in 2022$56mln recovered to state budget in 2022
CBA improves net private transfers forecast for 2022CBA improves net private transfers forecast for 2022
CBA improves unemployment forecast for 2022 CBA improves unemployment forecast for 2022 
RF Deputy Minister: financial institutions of Russia, Armenia are  expanding  network of correspondent relationsRF Deputy Minister: financial institutions of Russia, Armenia are  expanding  network of correspondent relations
Vahan Kerobyan: Number of labor migrants to reduce significantly next  yearVahan Kerobyan: Number of labor migrants to reduce significantly next  year
EDB analysts expect 12% growth in mutual trade in EAEU by end of 2022EDB analysts expect 12% growth in mutual trade in EAEU by end of 2022
Analyst: Global confrontation between West and Russia urgently  dictates the acceleration of integration processesAnalyst: Global confrontation between West and Russia urgently  dictates the acceleration of integration processes
Minister of Economy voices main risks to achieve economic growthMinister of Economy voices main risks to achieve economic growth
Final phase of ADB-financed bypass road program startsFinal phase of ADB-financed bypass road program starts
Deputy Prime Ministers of Armenia, Russia took part in solemn  ceremony of commemorative cancellation of stamp on establishment of  diplomatic relations between countriesDeputy Prime Ministers of Armenia, Russia took part in solemn  ceremony of commemorative cancellation of stamp on establishment of  diplomatic relations between countries
First stage of work under First stage of work under "Engineering City" program has been  successfully completed
Deadlines for submission of income declarations by individuals have  been changedDeadlines for submission of income declarations by individuals have  been changed
Armenia, Netherlands discuss new opportunities for cooperation in  technological fieldArmenia, Netherlands discuss new opportunities for cooperation in  technological field
Over 700,000 officially registered employees in Armenia Over 700,000 officially registered employees in Armenia 
Armenian Parliament elects CBA Deputy Governor and new member of CBA  Board Armenian Parliament elects CBA Deputy Governor and new member of CBA  Board 
IFC, Amundi-Acba Launch Partnership to Increase Investment in Armenia’s InfrastructureIFC, Amundi-Acba Launch Partnership to Increase Investment in Armenia’s Infrastructure
Structural reforms more urgent amid significant uncertainty – IMFStructural reforms more urgent amid significant uncertainty – IMF
Experts: Armenia`s energy security is key component of national  securityExperts: Armenia`s energy security is key component of national  security
Vahe Hovhannisyan appointed new Minister of Finance of ArmeniaVahe Hovhannisyan appointed new Minister of Finance of Armenia
First in Armenia. IDBank presents Visa Travel card for travel loversFirst in Armenia. IDBank presents Visa Travel card for travel lovers
Structural reforms more urgent amid significant uncertainty – IMFStructural reforms more urgent amid significant uncertainty – IMF
Turkish citizens own 100 real estates in Armenia, Azerbaijani  citizens - up to 10Turkish citizens own 100 real estates in Armenia, Azerbaijani  citizens - up to 10
Babken Tunyan: IT tax benefits are expenses that fall on the  shoulders of other taxpayersBabken Tunyan: IT tax benefits are expenses that fall on the  shoulders of other taxpayers
Converse Bank launches contactless cashless payment tool, C-POS  mobile appConverse Bank launches contactless cashless payment tool, C-POS  mobile app
Vahan Kerobyan receives delegation of ICC NCA headed by Raffy  SemerdjianVahan Kerobyan receives delegation of ICC NCA headed by Raffy  Semerdjian
Read more


Exchange rates
26.01.2023
RUB5.730.00
USD395.65-0.37
EUR431.461.14
GBP490.253.03
CAD295.57-0.43
JPY30.500.03
CNY58.44-0.05
CHF430.901.70