YEREVAN, OCTOBER 4, ARMENPRESS: The German government-owned KfW bank will soon allocate a 12 million euro credit to Armenia’s Central Bank to support the country’s developing mortgage market. The Central Bank will distribute the German credit among 6 local commercial banks and 2 crediting organizations which will offer mortgage loans to Armenians wishing to buy new apartments and houses.
KfW’s credit is given with a payment period of 40 years and at 0.75 percent annual interest rate. The first tranche will be 6 million along with 1.5 million euro grant that will be used for consulting services and organization of training courses for local specialists.
This program is supposed to give a boost to local mortgage market, to force interest rates down and extend repayment period. Karapet Gevorkian, a representative of the KfW in Armenia, said to a news conference today that under the German bank’s terms, mortgage loans must be allocated in national Armenian currency, their amount must not exceed 12 million drams or $30,000 and the repayment period must be no shorter than 10 years.
Another mandatory term is that borrowers must have life and property insurances. Gevorkian said the interest rate will be defined by the local market. First credits from the KfW loan will be issued next year.
Currently interest rate are between 10-15 percent annually. Experts estimate there is a $150, million demand for mortgage credits now.
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