Kyrgyzstan to Offer Low-Interest Mortgages
Monday 17 October 2011
BISHKEK (Central Asia Online) – Three years after the global financial crisis almost wiped out mortgage lending in Kyrgyzstan, the government is attempting to revive the industry in hopes of solving housing problems such as rampant squatting.
- Nearly 70% of the population lives in substandard homes or is homeless. It is not unusual for three generations to be crowded into a single room with no heating or water.
The dramatic collapse of mortgage markets three years ago caught the country by surprise. Borrowers were unable to repay loans during the global financial crisis and banks responded by raising the annual percentage rate to 40-45%, and almost fully withdrawing from mortgage lending.
Kyrgyz National University Sociologist Ibraim Sadykzhan explained the mortgage crisis’s impact. “No average citizen could afford to buy a home under such circumstances, so people started looking for other outlets, which can lead to social unrest.”
During the 2010 parliamentary campaign, many candidates promised mortgages at 8-10% for terms of up to 30 years and down payments of 10%. MPs are now discussing the issue. The mortgage problem is one of the three major tasks the government needs to resolve in the near future, Prime Minister Almazbek Atambayev said at a cabinet meeting in September.
According to the plan, commercial banks are going to help the state in a manner that remains undetermined.
Such housing could cost more – up to US $600 (26,900 KGS) per m² – but the mortgage programme with long-term repayment options would allow citizens not only to buy flats in the new buildings, but to also to change the look of the city.