Demand for mortgage loans exceeds market supply in Armenia

Demand for mortgage loans exceeds market supply in Armenia

The demand for mortgage loans exceeds the market supply, Armenian Director of the Armenian-European Policy and Legal Advice Center (AEPLAC) Tigran Jrbashyan stated in his exclusive interview to the ARKA News Agency.
“By my estimates, the demand for mortgage loans exceeds supply by some 50%, while the sections of the population borrowing mortgage loans are well-to-do,” he said.

On the other hand, the expert believes that the country has to pass a long way to reach the level when larger sections of Armenia’s population are involved in the mortgage crediting process. He attributed this fact to Armenian banks’ lacking long money.

Banks attract short-term deposits while issuing long-term credits. Banks need long money, Jrbashyan said.

According to him, the world financial crisis caused a serious outflow of investment from Armenia. The country is facing a situation when growing demand for mortgage loans is accompanied by the lack of funds in the country’s banking system, which causes a rise in interest rates, Jrbashyan said.

One of the ways out of the problem is the securitization of bank assets. “This is one of the ways of attracting and forming long money,” he said. Jrbashyan pointed out the necessity for amending a number of laws, particulars the laws on pledge and registration of immovable property, tax laws.

“The amendments will make smooth securitization of bank assets possible,” he said.
By March 31, 2008, the mortgage loan portfolio of Armenian banks had amounted to 59,327.2mln AMD – an 11.2% increase since the beginning of 2008. The share of mortgage credits in the banks’ mortgage portfolio had been 12.11%. The mortgage loan portfolio of Armenia’s credit institutions had amounted to 4,563.7mln AMD – an 8% increase since the beginning of 2008. Among the leaders in mortgage crediting are the HSBC Bank Armenia (18.3bln AMD) and Unibank (8.9bln AMD). P.T. –0—