ArmInfo. Armenia's commercial banks and lending agencies will from now on issue consumer and mortgage loans in AMD terms only. Armenia's Parliament is discussing the draft amendments to the Law on Currency Control.
Co-author of the draft Gevorg Papoyan, Chairman of the Standing Committee on Financial-Credit and Budgetary Affairs, said that against the background of geopolitical developments, uncertainties in financial and non-financial markets, including foreign exchange transactions, have significantly increased. In this context, currency fluctuations carry serious risks, especially for those citizens of the country who have attracted loans in currencies, especially mortgage loans. To avoid possible risks, it is proposed to issue mortgage loans exclusively in the national currency - drams. At the same time, we are talking only about the residents of Armenia. "People who attract or have already attracted mortgage loans for a period of 20 years in foreign currency are exposed to very serious risks," the deputy said. He added that 2 months ago the euro exchange rate was 392 drams, and a citizen who attracted a loan in euro at that time, today pays 9% more funds, since the euro exchange rate rose to AMD 427.
According to the draft, foreign-exchange mortgage loans can only be issued to nonresidents, whereas consumer and mortgage lending to residents both affords opportunities and poses risks.
"Interestingly, the recent period has seen a trend of mortgage lending in Euro while Armenian citizens get their incomes in Armenian drams," Mr Papoyan said.
Often, those who attract foreign currency mortgage loans, due to their illiteracy, pay attention to the difference of 1-2% between AMD and foreign exchange terms, as a result of which they subsequently face serious problems. "If today a citizen attracts a mortgage loan in US dollars for a period of 20 years, the rate of which is currently 400 drams, in 10 years he may face the problem of payments at the rate of 540 drams," the deputy noted, not ruling out the possibility and lower rates. "There is indeed such an opportunity, taking into account the "floating" exchange rate, but you cannot be guided only by this circumstance, since if the rate rises in 10 years, a citizen will pay 20.30, 40 percent more," Papoyan emphasized.
The non-performing AMD loans constitute 1.5 to 2 percent in Armenia's banking system, foreign-exchange loans, 4.5-6%. In shock periods, especially in 2014, the share of non-performing foreign-exchange loans reached 12%, with that of AMD loans remaining 4.4%.
