This week the Central Bank of Mongolia released a May 2014 report on the annual eight percent interest housing loan issued by the government through commercial banks.
The report said that in May 2014, a total of 112.3 billion MNT was issued to 2,084 borrowers through the housing loan program. The bank said that total outstanding mortgage loans reached 2.36 trillion MNT and the total number of borrowers reached 57,579.
The eight percent housing loan program was initiated by Prime Minister N.Altankhuyag in an effort to stabilize housing prices and provide affordable housing to ger district residents to reduce air pollution caused by coal burning stoves in ger area.
Over 60 percent of Ulaanbaatar’s 1.3 million resident live in ger districts and use coal stoves for home heating in the winter and for cooking year round. Air pollution caused largely by coal burning is estimated to be responsible for over one in four deaths in Ulaanbaatar.
“The growth rate of total outstanding mortgage loans has accelerated since June 2013, as the government launched the Housing Mortgage Program with an interest rate of eight percent per annum. Year-on-year growth of total mortgage loans outstanding increased by 1.6 percent from the previous month, 10.4 percent from the beginning of year, and 103.9 percent compared to the same period of the previous year,” the Central Bank said.
Of the outstanding mortgage loans, 68.4 percent (1.61 trillion MNT) was issued by the Housing Mortgage Program, including refinanced mortgage loans with reduced interest rates of eight percent per annum, 28.5 percent (674.5 billion MNT) was financed by commercial bank capital, and 3.1 percent (72.8 billion MNT) was issued from other sources, reported the bank.
By the end of May 2014, domestic currency mortgage loans made up to 97.4 percent of total outstanding mortgage loans. The comparative share of past due, in arrears, and non-performing loans in total outstanding mortgage loans is stable.
The report added that by the end of May 2014, the share of non-performing loans in total outstanding mortgage loans was 0.4 percent.
Mortgage loans issued in May 2014
The Central Bank report said that mortgage loans issued in May 2014 increased by 0.6 percent since April, and 80.7 percent since 2013.
Some 82.3 billion MNT, which made up 73.2 percent of mortgage loans issued in the reporting month, was issued by the Housing Mortgage Program at an interest rate of eight percent per annum.
Since the midterm of 2010, the amount of issued loans per borrower has increased steadily and reached 53.9 million MNT by the end of May 2014, the report said.
In May, 28.2 billion MNT in mortgage loans was repaid, that is 54.2 percent more compared to the corresponding period of the previous year.
Number of borrowers
The report said that in May, mortgage loans were issued to 1,395 borrowers, and mortgage loans from commercial bank capital were issued to 688 borrowers. By the end of May 2014, the total number of borrowers reached 57,579.
Terms and interest rates of mortgage loans
The terms of mortgage loans issued in the reporting month ranged between 0.5 to 20 years and had a weighted average term of 15.8 years, the Central Bank reported. The weighted average term of total outstanding mortgage loans was 14.9 years.
The weighted average interest rate of issued mortgage loans stood at 10 percent. The weighted average interest rate of mortgage loans issued in the reporting month by commercial banks own capital in domestic currency was 15.6 percent, while the foreign currency average was 8.7 percent per annum.
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