Govt in talks with IMF to settle 2019 mortgage program financing www.zgm.mn
Ministry of Construction and Urban Development (MCUD) is aiming to reduce mortgage loan down payment to 25 percent from 30. The down payment reduction is expected to increase the number of households capable of repaying mortgage loan to about 31,000 according to an official close to the matter. A supply and demand study, conducted amongst the 152 khoroos (smallest administrative unit of Mongolia) of Ulaanbaatar, shows that around 252,000 households are interested in applying for mortgage program, of which only 13,000 households meet the criteria. According to the MCUD, over 33,000 accommodations are currently ready for sale in Ulaanbaatar city. 2018 State Budget allocated around MNT 120 billion for the mortgage program. Also, mortgage lenders are expected to pump MNT 220 billion to the program through interest payments this year. In other words, around MNT 340 billion can be financed for the program in 2018, highlighted the Minister of Finance Khurelbaatar Chimed.
Govt and BoM financed MNT 156 billion in 2018
However, the financing of the new mortgage loan program is yet to be settled. The MCUD has presented a draft bill on transferring he program to the Government within the next month. The bill is now being reviewed by the Ministry of Finance and will take effect starting from January 1, 2019 if approved. Additionally, the International Monetary Fund staff team led by Geoff Gottlieb is currently visiting Mongolia until next week for the fifth review of Extended Fund Facility program. Thus, the Government is taking the opportunity to hold talks with the IMF team on the financing of the new mortgage program, as well as salary raise. Ministry of Finance refused to clarify details of the meetings as sides are yet to reach a final decision. Concerning the financing of mortgage program, several options are in discussion; for instance, if the program is transferred to the Government, a new regulation will come into effect. But if the Bank of Mongolia (BoM) continues to pilot the program, the current regulation will stay intact. In June, mortgage lending totalled MNT 82 billion, of which 42 percent was sourced from the program and 58 percent from commercial banks’ capital. The BoM monthly grants MNT 16 billion, and Ministry of Finance - MNT 10 billion for the program, adding up to MNT 156 billion in the first half of this year.
Published Date:2018-08-03