AZE.US
Older residential buildings in Azerbaijan are increasingly being left outside the mortgage market, and the reason comes down less to appearance than to risk calculations.
Speaking at a press conference on the 2025 Financial Stability Report, Central Bank Managing Director Shahin Mahmudzada said banks take into account the average service life of a building when deciding whether to issue a mortgage for an apartment in an older block.
The logic is straightforward. A mortgage is usually a long-term loan, often stretching over 25 to 30 years. But if a building has already used up most of its эксплуатационный ресурс, the bank cannot reasonably extend financing beyond the period in which that property is expected to remain viable.
In practical terms, that means an apartment in an old building may still be livable, marketable and attractive to buyers, but not acceptable to a bank as long-term collateral. If a property has only a limited number of years left within its estimated service life, the bank sees a mismatch between the duration of the loan and the durability of the asset behind it.
That is the main reason many older apartments struggle to qualify for mortgage financing in Azerbaijan. For the lender, the issue is not just the buyer’s income or repayment ability. It is also whether the collateral will remain secure and economically sound for the entire life of the loan.
This creates a growing divide in the housing market. Buyers may still be interested in older apartments because of price, location or larger floor plans, but many of those properties are becoming harder to finance through standard mortgage channels. As a result, demand for such homes is more likely to come from cash buyers or from people using alternative forms of financing.
Mahmudzada also said Azerbaijan is preparing a new concept for compulsory real estate insurance. Under the proposed approach, insurance coverage would be calculated based on the size of the property in square meters, bringing insured values closer to actual market prices.
That signals a broader trend in the market: both lenders and insurers are moving toward a more technical, value-based assessment of housing. For newer apartments, that may improve access to financing and protection. For older buildings, it may have the opposite effect.
In the end, the reason older buildings often do not qualify for mortgages in Azerbaijan is blunt but simple: banks do not want to lend for longer than the building itself is expected to last.