GERMAN KFW BANK TO GIVE 12 MILLION CREDIT TO BOOST ARMENIAN MORTGAGE MARKET

Armenpress
Oct 04 2006

YEREVAN, OCTOBER 4, ARMENPRESS: The German government-owned KfW bank
will soon allocate a 12 million euro credit to Armenia’s Central Bank
to support the country’s developing mortgage market. The Central Bank
will distribute the German credit among 6 local commercial banks and
2 crediting organizations which will offer mortgage loans to Armenians
wishing to buy new apartments and houses.

KfW’s credit is given with a payment period of 40 years and at 0.75
percent annual interest rate. The first tranche will be 6 million
along with 1.5 million euro grant that will be used for consulting
services and organization of training courses for local specialists.

This program is supposed to give a boost to local mortgage market,
to force interest rates down and extend repayment period. Karapet
Gevorkian, a representative of the KfW in Armenia, said to a news
conference today that under the German bank’s terms, mortgage loans
must be allocated in national Armenian currency, their amount must
not exceed 12 million drams or $30,000 and the repayment period must
be no shorter than 10 years.

Another mandatory term is that borrowers must have life and property
insurances. Gevorkian said the interest rate will be defined by the
local market.

First credits from the KfW loan will be issued next year.

Currently interest rate are between 10-15 percent annually. Experts
estimate there is a $150, million demand for mortgage credits now.