TODAY.AZ / Business

Banks not observing transparency of mortgage loans

11 April 2006 [07:42] - TODAY.AZ
No changes are expected to be made to interest rates on mortgage loans of the Mortgage Fund of Azerbaijan (MFA) funded from the state budget.

Some changes to be made soon will be related to certain concessions in the process of mortgage loan provision. Those concessions will concern some categories of the population to be determined by the government, APA reports citing the MFA executive director Faig Mammadov.

Authorized banking organizations identified by MFA have started reception of appeals from potential clients since March 1. In the first month of the process only 4 persons could obtain mortgage credits. According to the information spread by MFA on the last of March, first mortgage loans were granted by Bank Standard, Turanbank, Tekhnikabank and Khalg Bank at the expense of their internal resources and according to the existing rules, MFA will reimburse that amount to the banks soon.

So, according to the executive director of MFA Faig Mammadov, "extension of 4 mortgage loans in the first month is a very good indicator. Taking into account that this practice is applied in Azerbaijan for the first time, it is quite normal". The Fund's director said that taking into consideration great number documents of applicants applying to authorized banks and insurance companies, the process takes approximately 2 weeks. Regarding great number of documents, the executive director stressed that the number of documents required for mortgage credit is practically the same as the number of documents required for other credits: "Set of documents and accuracy is a guaranty of a borrower. Through these documents authorized banks obtain information about borrowers".

The MFA head also said that 2 of 4 borrowers who obtained first mortgage loans are young families, and the amount they will monthly pay on mortgage loans is less than AZN 100 and AZN 200 individually: "That means any citizen with average living standards can receive a mortgage credit". As regards the number of appeals, it was reported from the Fund that thousands of oral appeals and over 50 official applications were submitted to MFA.

The head of the press-service of the International Bank of Azerbaijan Rauf Aghayev: "The exact number of persons applied to our Bank orally and officially for mortgage credits is not known – this is a great number. Pursuant to the terms, the Bank planned to supply mortgage loans to three families. It was calculated as a result of division of $90 thousand by $30 thousand what equals to 3. Regarding the terms and interest rates, according to the requirements of the Mortgage Fund, works are carried out on this process. The date of provision of the first mortgage credit by the Bank is unknown at present".

The representatives of "Bank Standard" JSB consider existing credit terms of MFA normal and are of opinion that the process will be further activated in future. It should be noted that the first mortgage loan was granted by Bank Standard. The borrower of that loan was a private company employee born in 1978 with monthly income of $1000. The price of the apartment purchased was AZN 30129, AZN 21090 of which was paid at the expense of the mortgage loan. The credit was granted to the client with 12% per annum (highest interest rate) for 15 years.

The Chair of the Board of "Tekhnikabank" JSCB Samir Huseynov: "We have received up to 150 applications so far. About 15 of them are official applications. The first mortgage credit was provided for 15-year period. The initial mortgage loan provision terms are normal. Sharpness of the terms at the initial stage is correct. However, volume of funds allocated for the Fund from the budget is small".

The price of the apartment purchased by the Bank's client was AZN 50270, and the amount of the mortgage loan provided to the client formed AZN 30000. The credit was supplied with 12% per annum.

It is interesting that among the authorized banks only Tekhnikabank made concessions to its potential clients and adopted an official decision on reducing final interest rates. From now on, the Bank will extend mortgage loans with maximum 8% per annum.

It was noted from the credit department of "Khalg Bank" JSCB that 4 official appeals were received by the Bank in March and one of those appeals was satisfied. The amount of the mortgage credit was AZN 15960, the price of the apartment purchased formed AZN 23800, and mortgage rate was 10% per annum. At the same time, the specialists of the Bank stressed that the existing mortgage legislation needs some corrections.

"Turanbank" JSCB refused to comment the process at all. It should be noted that the amount of the first mortgage credit provided by the Bank equaled to AZN 7921, the price of the apartment was AZN 14500, and mortgage rate formed 12% annual.
It was noted from the credit department of "Capital Bank" JSB that no official applications were submitted to the Bank in March. However, the specialists of the Bank value the legislative framework as satisfactory: "We will try to make concessions to our clients and clarify all questions for them".

The specialist of "Azerdemiryolbank" JSB Rauf Mamedov also refused to comment the process and said that no mortgage loan has been extended by the Bank so far and even no official appeal have been submitted to the Bank: "Simply, some persons are interested in the process itself".

The employee of the credit department of "Azerigasbank" JSB Parvin Gasimova said that "only persons interested in the process have applied to the Bank up to now, but no official applications were submitted and therefore no mortgage credit has been granted by our Bank". Generally, Ms.Gasimova valued mortgage rates normal: "Interest rates on mortgage credits are normal, but discussions on making changes to the normative framework are held in the government at present. In my judgment, the mortgage program will attain necessary success".

The head of the mortgage crediting group of "Nikoil" ICB Rufat Veliyev also said that no mortgage loans have been supplied by the Bank yet: "However, over 20 official appeals have been received by the Bank so far, 4 citizens collected presented all required documents to us and documents of one of them were handed over to the Mortgage Fund". Mr.Veliyev thinks that mortgage rates are normal and even less than in some countries. "I do not think that difficulty of the documentation procedure eliminates the demand to mortgage loans in Azerbaijan. Simply, it is a new process and the society’s reaction to it is quite normal. The only matter I am concerned about is that the legislative framework does not provide for persons engaged in small business".

The director of the credit department of "Caucasus Development Bank" JSB Arif Ismayilov said that the Bank did not receive official appeals in the first month of the process: "It is a new project and therefore, has not generated public excitement yet. However, I think that the situation will change in the near future in this field".

Other authorized banks – "UniBank" OJSC, "AtaBank" OJSC, "Bank of Baku" OJSC, "Kochbank-Azerbaijan" JSB, and "Respublika" JSCB refused to answer the questions of APA at all, explaining it so that the process is not open to the public or the management does not permit it.

URL: http://www.today.az/news/business/24984.html

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