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Pashinyan on innovations of program "A young family - affordable apartment": there are banks that are ready to give a mortgage and at a lower interest

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03.10.2018
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On October 1, Prime  Minister of Armenia Nikol Pashinyan touched upon the program "A young family - an affordable apartment" during Facebook direct connection.

As the prime minister reminded, the Armenian government recently softened the terms of the program.  Now, as Pashinyan emphasized, the family can use the program, that is, be considered young, if the total age of the spouses is 70 years, against the early 65.

The next innovation of the program, as Pashinyan noted, is the  reduction of the interest rate to the maximum 7.5% in Yerevan and  5.5% in the regions of the country (on the secondary real estate  market), since in the first case, the state will subsidize 2% of  9.5%, and in the regions - 4%. According to the current procedure, a  mortgage loan is granted at 10.5-11% per annum, of which 2% is subsidized by the state - regardless of where exactly housing is purchased.

At the same time, as the head of government noted, it is a question of the maximum interest rate and in conditions of certain activity and competition between banks, it is also possible that the interest on the mortgage will be reduced. "I just talked on this subject with the head of the Central Bank (Arthur Javadyan,-editor's notes) And he told me that there are already banks ready to issue mortgages at a  lower interest rate," the prime minister said.

The next point of the proposed innovations relates to the prepayment,  which today is 30% for "secondary housing" and 20% - for the primary market. If the project is approved, it will go down to the  "cherished" 20% and 10%, respectively. The issue will be decided by the introduction of the Institute of prepayment insurance. In other words, in case

On October 1, Prime  Minister of Armenia Nikol Pashinyan touched upon the program "A young family - an affordable apartment" during Facebook direct connection.

 

As the prime minister reminded, the Armenian government recently softened the terms of the program.  Now, as Pashinyan emphasized, the family can use the program, that is, be considered young, if the total age of the spouses is 70 years, against the early 65.

 

The next innovation of the program, as Pashinyan noted, is the  reduction of the interest rate to the maximum 7.5% in Yerevan and  5.5% in the regions of the country (on the secondary real estate  market), since in the first case, the state will subsidize 2% of  9.5%, and in the regions - 4%. According to the current procedure, a  mortgage loan is granted at 10.5-11% per annum, of which 2% is subsidized by the state - regardless of where exactly housing is purchased.

 

At the same time, as the head of government noted, it is a question of the maximum interest rate and in conditions of certain activity and competition between banks, it is also possible that the interest on the mortgage will be reduced. "I just talked on this subject with the head of the Central Bank (Arthur Javadyan,-editor's notes) And he told me that there are already banks ready to issue mortgages at a  lower interest rate," the prime minister said.

 

The next point of the proposed innovations relates to the prepayment,  which today is 30% for "secondary housing" and 20% - for the primary market. If the project is approved, it will go down to the  "cherished" 20% and 10%, respectively. The issue will be decided by the introduction of the Institute of prepayment insurance. In other words, in cash, it will be possible to pay the amount of 10% of the cost of an apartment and to make insurance for the difference. A 30%  prepayment can be replaced by 10% in the case of a collateral in the form of a second apartment.

 

In addition, the Armenian government prolonged the maturity of the mortgage loan. Now the mortgage loan under the program can be provided for at least 10 years, the maximum maturity will be 30 years and 20 years (for new buildings and secondary housing, respectively).

 

According to the document, the maximum cost of the purchased housing is also established: in case of buying an apartment on the primary market (from the developer), the amount will be 30 million drams, and on the secondary one - 25 million drams. At the same time, the maximum nominal mortgage rate for the acquisition of housing in the primary market will be 7.5%. In this case, a subsidy from the state is not provided. They can receive a deduction on income tax in the amount of interest from a mortgage.

 

For today, as noted by Nikol Pashinyan, the government has committed to solving the housing problems of citizens in various ways. There is also a program in Armenia, according to which people who acquire housing in the primary market can pay their credit in the income tax account. That is, as the head of government pointed out, those who have high wages receive the income tax paid back by them, that is,  the mortgage becomes non-interest-bearing. Nevertheless, realizing that not all citizens have jobs and decent wages, according to the prime minister, the authorities will try to solve their housing problems by creating new jobs with the appropriate salary. "We are not talking about servicemen, for which the state has certain obligations, within the framework of which it is planned to resolve the issue," he explained.

 

The program "A young family - an affordable apartment," in pilot mode, was launched in 2010, on the basis of which the state program was launched. According to the data provided by the government, under the program, 19 financial organizations are currently involved in lending: 14 banks and 5 credit organizations.  As of August 30, 2018,  3,466 loans (1814 loans in Yerevan and 1652 in the regions of  Armenia) were issued with a total value of 28 billion 524 million drams (18 billion 401 million in Yerevan and 10 billion 123 million in the regions). Within the framework of the medium-term expenditure program for 2019-2021, according to the Armenian Ministry of Finance,  in 2012, 785 million drams are envisaged for the implementation of the program, but as a result of the new order coming into force, an additional 75 million drams will be required for its financing.

 

The program of state actions to mortgage borrowers, involving the return of income tax to compensate interest on mortgages, has been in force in Armenia since 2015. From 1 January 2018, interest is not compensated for a transaction exceeding 55 million drams. This possibility cannot be used also if the person or co-borrower purchases the second apartment under this program. According to the data of the State Revenue Committee of Armenia, for January-August this year the tax and customs committee returned almost 2,000 to the beneficiaries 3.2 billion drams. Throughout 2017, the figure was 2.4  bln AMD.

it will be possible to pay the amount of 10% of the cost of an apartment and to make insurance for the difference. A 30%  prepayment can be replaced by 10% in the case of a collateral in the form of a second apartment.

In addition, the Armenian government prolonged the maturity of the mortgage loan. Now the mortgage loan under the program can be provided for at least 10 years, the maximum maturity will be 30 years and 20 years (for new buildings and secondary housing, respectively).

According to the document, the maximum cost of the purchased housing is also established: in case of buying an apartment on the primary market (from the developer), the amount will be 30 million drams, and on the secondary one - 25 million drams. At the same time, the maximum nominal mortgage rate for the acquisition of housing in the primary market will be 7.5%. In this case, a subsidy from the state is not provided. They can receive a deduction on income tax in the amount of interest from a mortgage.

For today, as noted by Nikol Pashinyan, the government has committed to solving the housing problems of citizens in various ways. There is also a program in Armenia, according to which people who acquire housing in the primary market can pay their credit in the income tax account. That is, as the head of government pointed out, those who have high wages receive the income tax paid back by them, that is,  the mortgage becomes non-interest-bearing. Nevertheless, realizing that not all citizens have jobs and decent wages, according to the prime minister, the authorities will try to solve their housing problems by creating new jobs with the appropriate salary. "We are not talking about servicemen, for which the state has certain obligations, within the framework of which it is planned to resolve the issue," he explained.

The program "A young family - an affordable apartment," in pilot mode, was launched in 2010, on the basis of which the state program was launched. According to the data provided by the government, under the program, 19 financial organizations are currently involved in lending: 14 banks and 5 credit organizations.  As of August 30, 2018,  3,466 loans (1814 loans in Yerevan and 1652 in the regions of  Armenia) were issued with a total value of 28 billion 524 million drams (18 billion 401 million in Yerevan and 10 billion 123 million in the regions). Within the framework of the medium-term expenditure program for 2019-2021, according to the Armenian Ministry of Finance,  in 2012, 785 million drams are envisaged for the implementation of the program, but as a result of the new order coming into force, an additional 75 million drams will be required for its financing.

The program of state actions to mortgage borrowers, involving the return of income tax to compensate interest on mortgages, has been in force in Armenia since 2015. From 1 January 2018, interest is not compensated for a transaction exceeding 55 million drams. This possibility cannot be used also if the person or co-borrower purchases the second apartment under this program. According to the data of the State Revenue Committee of Armenia, for January-August this year the tax and customs committee returned almost 2,000 to the beneficiaries 3.2 billion drams. Throughout 2017, the figure was 2.4  bln AMD.

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