Decline in mortgage lending in Armenia due to canceled reimbursement of income tax 

ArmInfo. The comparative calm in the first months of 2025 on the mortgage lending market in Armenia was a consequence of the so-called progressive growth in December.  In an interview with an ArmInfo correspondent, experts explained the  strong influx of people wishing to take out a mortgage before the end of 2024 by the fact that the tax deduction mechanism for these loans will be canceled from 2025. In fact, as they explained, everyone who managed to get a mortgage loan before the current year will have the opportunity to use the preferential mechanism.

The progressive mortgage lending noted at the end of last year does not cause any particular concern among experts, which they explain by the liquidity of these loans.

Meanwhile, the day before, during a press conference dedicated to the refinancing rate, the Chairman of the Central Bank of Armenia Martyn Galstyan, answering journalists' questions, reported a low growth in mortgage lending for January-April 2025 - only 2.8%. Without giving much detail, he explained this by the banks conducting a front-load (i.e. progressive lending - Ed.) in December 2024, after which  January- February should have been weaker, and in March-April, restrained activity was again outlined. "I believe that for this period, this is an acceptable level of growth in mortgage lending. And the recorded rate is quite acceptable compared to December."

As noted by ArmInfo analysts, the volume of mortgage loans provided by banks to residents, according to the statistics of the Central Bank of the Republic of Armenia, increased by 7.6% in December 2024, by 15.7% in the fourth quarter, and by 37.4% year-on-year, reaching 1.471 trillion drams ($3.7 billion), of which 93% are dram mortgages. In 2025, a slight decline in the volume of mortgage loans was recorded in January, then in February there was an increase of 1% with the same rate maintained in March and April, which formed a growth for January-April at the level of 2.6% (versus 5.3% in the same period of 2024, with a noticeable monthly increase), reaching a  volume of 1.510 trillion drams ($3.9 billion). 

According to the results of 2024, credit companies provided mortgage loans in the amount of 23.8 billion drams ($60.1 million), with an increase of 1% in December, 3.5% in the fourth quarter, and only 0.2% year-on-year (against a 13% decline in 2023). In 2025, a decline in the volume of mortgage loans of 3.5% was recorded from January to April (against a 4% decline in the same period of 2024), with a monthly decrease - by 0.8% in January, by 0.6% in February, by 0.8% in March and by 1.4% in April, as a result of which the volume dropped to 22.98 billion drams ($58.9 million).

In total, the volume of mortgage loans provided by banks and credit companies reached 1.533 trillion drams ($3.93 billion) by May 2025, increasing by 33.2% year-on-year. Prior to this, for the whole of 2024, the total volume of mortgage loans increased by 36.5% - to 1.495 trillion drams ($3.8 billion).

According to the Financial Rating of Armenian Banks as of March 31, 2025, prepared by ArmInfo Investment Company, the volume of mortgage loans reached 1.550 trillion drams ($3.96 billion), with an increase of 6.3% in the first quarter and 36.5% year-on-year, while a year ago the quarterly and annual growth were 3.8% and 27%, respectively. For the whole of 2024, the volume of mortgage loans increased by 33.1%, and in the fourth quarter alone by 11.8%, against 28% per annum and  7.4% per quarter in 2023, respectively.

The legal norm on the return of income tax within the framework of mortgage lending came into force in November 2014, with the aim of creating a stable and solvent demand in the sector, as well as solving social problems. There were no restrictions on the number of such loans or the social status of the buyer.  But in 2017, the financial authorities, represented by the Ministry of Finance, stated that the social component was insignificant, and already in 2021 they advocated a gradual abandonment of this program in Yerevan, and the corresponding amendments to the RA Tax Code were approved by the government in August of the same year. Thus, the initiative was aimed at uniform territorial development through this program and giving it a clearer social character. In particular, the start of the cancellation of this benefit is dated July 1, 2022, first for citizens who decided to purchase an apartment with a mortgage in the 1st zone of Yerevan (Center). From January 1, 2023, the cancellation of this benefit came into force for those who purchased housing in the 2nd zone, from July 1, 2023 - in the 3rd zone, and from 2025 the benefit was canceled throughout the capital.