Pashinyan: Mortgage lending growth accelerates under the influence of  government decisions

ArmInfo.The volume of mortgage loans issued by banks increased in 2018 compared with 2017 by 20%. RA Prime Minister Nikol Pashinyan said this on his Facebook page, noting that the growth rates of mortgage lending are accelerating under the influence of government decisions.

He noted: "In fact, after the revolution, banks provided as many  mortgage loans as for the whole of 2017.  Along with this, bank  interest rates continue to decline." The Prime Minister highlighted  the success of the Affordable Housing for Young Families state  mortgage program: credit growth in November 2018 compared to November  2017 was 41%, in December 2018 against December 2017 - 85%, in  January 2019 by January 2018 - 131%. This indicates that the youth of  Armenia connects their future exclusively with their homeland. "

According to official data of the Central Bank of Armenia, the volume  of mortgage loans issued by banks increased by 22.1% per annum in  2018 to 255.2 billion drams ($ 527.6 million). And taking into  account the mortgage loans provided by credit companies, the total  mortgage portfolio increased in 2018 by 20.8% per annum - to 285.3  billion drams ($ 589.8 million). The interest rates on loans  decreased in 2018 on average from 12.1% to 10.5%, and for loans with  a maturity over 1 year from 12.6% to 10.9%. In particular, the rates  on dram loans decreased over the year from an average of 14.5% to  12.5% (with a maturity of over 1 year - from 15.4% to 12.6%), and on  dollar loans - from 9.6 % to 8.6% (with a maturity of over 1 year -  from 9.8% to 9.2%). Three years earlier (2015), loan rates averaged  14.3%, in particular for dram loans - 17.7% and for dollar 10.9%, and  only for loans with a maturity of over 1 year - 14.5% (including on  dram - 17.2% and on dollar - 11.8%).

To note, all 17 banks operate in the Armenian mortgage market. Along  with this, among the functioning credit companies are the National  Mortgage Company (established in June 2009) and Affordable Housing  for Young People (established in February 2010), which are designed  to refinance mortgage loans as part of the state program to subsidize  interest rates.

In the state program of mortgage lending in several stages, the  conditions were revised towards improvement. According to the latest  changes in the "Affordable housing for young families" program, the  threshold of the total age of spouses from the previous 65 years has  been raised to 70 years, and the loan repayment period is set to 30  years; When buying housing in the secondary market, the limit on the  cost of an apartment was set to 25 million drams, the maximum  interest rate was reduced from the previous 10.5% to 9.5% (with a  subsidy of 2% in Yerevan or 4% in the regions), the prepayment amount  from 30 % can be reduced to 10% in the presence of other real estate  for collateral or insurance of 20% of the cost of housing; and when  buying a home in the primary market, the limit on the cost of an  apartment is set to 30 million drams, the maximum interest rate is  7.5% (instead of subsidizing the rate, indirect subsidies are  provided in the form of income tax refunds), the prepayment amount  can be reduced from 20% to 10% in the presence of other property for  collateral or insurance of 10% of the cost of housing. For the loans  of the National Mortgage Company, in addition to the above  conditions, young professionals under the age of 30 and those who  have not entered into marriage are given the opportunity to buy  housing on a mortgage in new buildings on the following conditions:  prepayment - 7.5%; repayment term - 35 years; interest rate reduction  by 0.5% when buying a home in an energy-efficient building (in the  rare mode, the rate is 10.6%).

According to the Ranking of Armenian Credit Companies on January 1,  2019, prepared by ArmInfo IC, the total mortgage portfolio of the  National Mortgage Company and Affordable Housing for Young People was  154.2 billion drams ($ 318.7 million) with an y-o-y growth of 3.2%,  and in a three-year cut - by 56.2%.