State Mortgage Company starts operating in Kyrgyzstan

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BISHKEK (TCA) — The Government of Kyrgyzstan has developed an affordable housing program until 2020 for public-sector employees.

Over the past years, about 800 apartments for law-enforcement, security, border guard, and defense ministry officers have been built. In the future, more than 1,000 new apartments for military personnel will be constructed, Vice Prime Minister of Kyrgyzstan Gulmira Kudaiberdieva said on January 14 at a press conference in Bishkek.

Since the beginning of 2016, the Government has begun implementing the housing program covering all regions in the country. Late last year, a National Mortgage Company JSC was established. Kudaiberdieva explained conditions and the procedure for the selection of participants in the program.

An Interdepartmental Commission for the State Housing Program Coordination includes not only heads of state bodies but also representatives of civil society, associations, local authorities, and parliament deputies. The commission will determine housing quotas for ministries and state agencies. The process of selection and approval of the program participants will be open and transparent to the participants and the public, Kudaiberdieva said. All information about the activities of the State Mortgage Company, the terms of obtaining preferential loans and lists of those who receive them will be posted on the SMC website.

First of all, the Government plans to provide preferential loans to workers of the healthcare, education and social protection sectors. Preference will be given to large families and families with children with disabilities, as well as families whose members died in the government service.

In the future, the scope of the program will be expanded.

Sources of funding

According to Finance Minister Adylbek Kasymaliev, the state budget will provide 300 million soms to the State Mortgage Company until the end of January as a contribution to the company’s authorized capital. The ministry said it has found sources to recover 5 billion soms necessary to finance the State Mortgage Company.

The ministry will start allocating loans to the State Mortgage Company in February. The bulk of the amount, about 4 billion soms, will be provided by the Russian-Kyrgyz Development Fund through the purchase of government securities. The RKDF experts have studied the housing market to support the program and have developed several options of participating in the program.

The Finance Ministry will issue government securities and the RKDF will buy them and then these funds will be allocated to the mortgage company in the form of state loans, presumably at 5 percent per annum for ten years.

Terms of lending

The maximum loan amount will be 3 million soms.

An apartment area must not exceed 70 square meters in cities and a residential house in villages should be not more than 150 square meters. A person can buy both primary and secondary housing, but in the future the SMC plans to focus on new homes only, and the company is now negotiating with construction companies.

The maximum loan term will be 15 years. However, a loan can be paid off earlier.

With an initial contribution of 10% to 20% of the property cost, the annual rate will be 14%. If the initial payment is between 20% and 30%, the interest rate will be 13%. Initial payment of 30% or higher will reduce the interest rate to 12% per annum.

The housing mortgage is available for Kyrgyz citizens at ages from 21 to 65, with not less than 1.5 year working record in the public sector. Applicants should not make any civil property transactions over the last three years and not have a negative credit history.

The applicants’ official salary should be enough to not only pay off the loan over 15 years but also cover family expenses. Applicants must also have a guarantor of the mortgage loan.

According to the SMC, employees of the public sector can get mortgage loans individually and collectively. Kyrgyz citizens can unite into groups and invest in construction and savings banks. With accumulated funds, members of such groups can get a mortgage loan.

Kyrgyz citizens cannot apply to the State Mortgage Company independently. A list of the program participants will be formed by state administrations at places of residence or work.

The program will cover the entire country and this will help curb the rise in property prices, the company believes.