Downpayment and interest rates of mortgage loan program to reduce

ZGM DAILY

2018-05-29 14:24 GMT+8

Mongolia has been implementing eight percent mortgage loan since 2013. During this time, MNT 4.2 trillion was granted to the public and 76,249 citizens were provided with housing. The Bank of Mongolia (BoM) suspended its financing for the program after Mongolia joined the International Monetary Fund’s program. Therefore, the program received its financing solely from the state budget starting from the last year. As of today, the mortgage loan program is being financed from three sources.

For example, MNT 110 billion was granted from the state budget last year, MNT 294 billion from the repayment of the BoM and MNT 266 billion from commercial banks. This financing allowed 10.5 thousand families to be provided with accommodation. This year, the Government planned to finance MNT 120 billion for the program and allocated MNT 60 billion so far. As for 2019, it is estimated to allocate MNT 130 billion for the program.

Badelkhan Khavdislam, Minister of Construction and Urban Development, recently informed to revise the regulations of mortgage program and will be submitted to the Cabinet soon. As the Cabinet expects, the regulation will be formulated to reduce smoke and support households included in the city re-planning projects.

The early estimation includes to reduce downpayment of mortgage loan to 25 percent in the new regulation. Also there is a proposal to reduce the interest rate; however, it is now not sure whether the Cabinet will support this.

As of the end of the last year, there were 308 thousand households, of which 164 thousand are connected to the engineering network in Ulaanbaatar. In addition, there are 35 thousand households capable to purchase housing in the capital and 14.9 thousand in local areas.

As for the housing currently under construction, the statistics show that accommodation for 35.8 thousand households will be commissioned in Ulaanbaatar, and 10.8 thousand housing in the local areas in the next three years. In addition, 44 thousand citizens are interested in living in rental apartments.

Throughout the country, 6,390 apartments are currently ready for sale, of which accommodation for 4.6 thousand households are less than 80 square meters. In other words, apartments for 4622 households will be covered with the mortgage loan.

Parliament and Cabinet issued resolutions on circulation the ready apartments. “We study how to circulate them,” Mr. Badelkhan said. In 2008-2012, a program to cover the housing of 4 thousand public servants was implemented successfully. Currently, the ministry is studying opportunities to provide public servants with housing. The proposal will be submitted to Cabinet soon.

There was a discussion on the option for the government to purchase apartments and rent citizens for rental. However, the minister noted that it is impossible to implement as the Government is in crisis. “The Government pays 50 percent of the earned income for the loan. Therefore, efficient measure are currently under study,” the minister emphasized.

Last year, construction companies provided 762 households with apartments at their financing of MNT 29 billion. “This is the interest of the companies,” the minister said. “To increase their sales, they can implement their options. There is no need for the government to involve in this,” he added.

The key issue the citizens complain is that banks provide loans on selected blocks only. On this issue, the minister explained, “Banks grant loan to construction companies and support their sales in order to keep the loan effective,” Mr. Badelkhan emphasized.

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