Mongolia will introduce a mortgage package charging 6 percent interest for three years then 12 percent for seven, Finance Minister Z. Mendsaikhan said, aiming to clear a queue of tens of thousands waiting for subsidized housing loans.

Commercial banks have received about 45,000 applications for the existing 6 percent mortgage on a cumulative basis, Mendsaikhan said, and the new package is being designed with the Bank of Mongolia, IKon reported.

How the package works
The minister was explicit that the new product will not finance new construction. Instead it targets roughly 22,000 apartments already built by the private sector and through government foreign-loan funding, of which about 16,000 will enter use next year, allowing 16,000 citizens to be enrolled in the mortgage program, IKon reported.

Priority groups named by the minister include public servants, doctors and teachers. The package will also offer options to reduce the down payment and rent-to-own structures, giving households a path to ownership without the full upfront contribution the current program demands.

Funding is planned from abroad: the government intends to raise about $500 million, or ₮1.8 trillion, from international markets for the mortgage program, with the state budget carrying the swap cost, and the minister said the provision is already reflected in budget submissions, IKon reported.

The queue the package must clear
Demand has outrun supply for years. Mongolbank said in May that more than 47,000 citizens were waiting for the 6 percent loan, and the draft housing law presented to parliament estimates accumulated applications at commercial banks at ₮4 trillion, CNBC.mn reported. The central bank's governor noted in March that over the past decade-plus the program had directed ₮10.7 trillion to more than 140,000 households, while waits of five to six years had emerged.

Supply has also stuttered: some commercial banks temporarily paused new 6 percent disbursements until the State Great Khural's autumn session, although Mongolbank denied any decision to stop the program, saying financing continues as normal, CNBC.mn reported.

The ministry is studying a wider redesign, including tiered mortgage products at 8 to 14 percent to broaden funding sources and shorten waits, and a specialized housing finance bank that would raise resources and supply them to commercial banks rather than lend to households directly; the two draft laws were submitted on June 11, CNBC.mn reported.

Subsidized mortgages are the main route to home ownership for middle-income Mongolians, and the 6 percent product in particular has become the default expectation, IKon noted in introducing the minister's remarks. That concentration is precisely the bottleneck: the construction minister explained in June that demand focused on the 6 percent product stretches waits to four or five years and pushes excluded households toward costlier commercial mortgages, CNBC.mn reported.

What the new rates mean for borrowers
The stepped rate is a compromise between subsidy and market: six percent for three years keeps initial payments near the current program's level, while 12 percent afterward moves borrowers toward commercial pricing, which the minister's own ministry has studied in an 8 to 14 percent band. Households that expected a flat 6 percent for three decades will read the change differently from those stuck in the queue, for whom any new tranche is relief.

Mendsaikhan's figures also reveal the program's scale problem: 16,000 new enrollments against a queue of 45,000 to 47,000 clears at best a third of waiting households, leaving the tiered 8 to 14 percent products as the likely route for the remainder.

The proposed specialized bank would sit between capital markets and retail lenders, pooling mortgage funding and issuing it to commercial banks, a structure intended to decouple subsidy politics from loan supply; its draft law remains with parliament, CNBC.mn reported.

Years 1-3: 6 percent annual interest under the new package.
Years 4-10: 12 percent annual interest.
Target: about 16,000 citizens entering completed apartments next year.
Funding: about $500 million, or ₮1.8 trillion, raised internationally, swap cost in budget.
Queue: about 45,000 cumulative applications per the minister; 47,000 per Mongolbank in May.
The package arrives as legislation, not decree: the swap-cost provision sits in the budget the Khural must approve, and the specialized bank requires passage of the June drafts. Until then, the queue keeps waiting, and the minister's 16,000 figure is a promise about next year's completions, not a list of approved borrowers.

Published Date:2026-09-16