AZE.US
Buying a home with a mortgage has become increasingly difficult in Azerbaijan as property prices rise faster than state-backed lending limits.
The rules themselves have not changed. Standard mortgages still carry an interest rate of 8%, while subsidized mortgages are offered at 4%, economist Vugar Oruj told Demokrat.az.
The maximum subsidized mortgage remains 100,000 manats ($58,800). The limit for a standard mortgage is 150,000 manats ($88,200).
But those amounts now cover a much smaller share of a home’s value.
Property prices have risen by 70% to 80% in some areas over the past five years, Oruj said. In certain locations, prices have doubled.
For a home priced at 180,000 manats ($105,900), a buyer would typically need to provide about 36,000 manats ($21,200) as a down payment. The remaining amount could be financed through an authorized bank using funds from Azerbaijan’s Mortgage and Credit Guarantee Fund.
In practice, current lending limits allow buyers to consider homes priced at roughly 200,000 manats ($117,600) or less.
At today’s prices, that usually means a one-bedroom apartment, a small unit converted into a two-bedroom home, or a two-bedroom apartment on the outskirts of the city.
The Azerbaijan Society of Appraisers has proposed raising the standard mortgage limit to about 200,000 manats ($117,600) and the subsidized mortgage ceiling to 150,000 manats ($88,200).
Oruj said the increase would not fully match market prices, but it would bring mortgage financing closer to current conditions and give buyers more options.
Banks have also become more cautious when assessing applicants. Permanent employment, income, payment capacity and previous credit history are now examined more closely before a mortgage is approved.
“The biggest problem today is the size of the loan,” Oruj said.
A normal two-bedroom apartment near the city center can now cost at least 250,000 to 300,000 manats ($147,100 to $176,500), he added. That means the maximum mortgage may cover only about half of the property’s market value.
Oruj called for mortgage limits to be reviewed and for new social housing projects to be launched to make apartments more affordable.
AZE.US