YEREVAN, May 19. /ARKA/. Arthur Javadyan, chairman of the Central Bank of Armenia, speaking Monday in the National Assembly, said the country’s commercial banks can’t afford to extend mortgage loans without down payment.

In his words, mortgage loan prepayment in Armenia makes 20 to 30 percent, on average.
Javadyan said that too low prepayment, for example 10 to 15 percent, or no prepayment would create certain risks.

“For example, fluctuations in liquidity at the real estate market would strike hard at banks and rebound on the economy,” he said. “After the 2008 crisis, which was triggered right by mortgage system, the prepayment’s safety cushion became no less than 30%.”

Javadyan said that Armenia has a quite accomplished mortgage market now also thanks to the governmental support provided under various projects.

Among these projects, he singled out the establishment of the National Mortgage Company and the implementation of the Available Housing for Young Families program, under which the government refinances banks’ mortgage loans.

According to the central bank’s reports, banks’ aggregate mortgage loan portfolio amounted to AMD 145.13 billion in late March 2014 showing 1.35% growth since the beginning of this year.

On Monday, Armenian President Serzh Sargsyan proposed the lawmakers to reelect Arthur Javadyan as chairman of the country’s regulator for a six-year term, in accordance with the Constitution.-0--