Wednesday, March 27 2019 12:36

ArmInfo.Armenia is facing a construction boom. On March 27, presenting in the country's parliament a report on the implementation of the program of the RA  government in 2018, RA Prime Minister Nikol Pashinyan said.

According to him, the basis for such an optimistic forecast can be  more than interesting processes in the field of mortgage lending. In  January of this year, compared with January 2018, mortgage lending  increased by 77%, and in February compared to February 2018 - by  100%. In general, the portfolio of mortgage loans increased by 30% or  about 70 billion drams. This means, the head of government continued,  that since May last year and to the present, citizens of the country  have made real estate transactions worth about $ 150 million.

"Thus, the citizens of Armenia expressed their confidence in their  future, since the funds that could be used for emigration are  invested in solving their housing problems," the head of government  said, expressing confidence in the coming construction boom, which  would open new work places.

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 from 20% can be reduced to 10% in the presence of other  real estate 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 y-o-y growth of 3.2%, and in a three-year cut - by  56.2%.