The Government has made a decision to reduce mortgage loan interest rate to 6% APR from current 8 % APR issued by the MHFC. The delay in the decision is apparently caused as a result of the mortgage loan applicants, who had been granted quotes within the framework of the “4000 Housing Units” project, failing to enter mortgage loan agreements with MHFC.
We had an interview with M.Ulambayar, the Director of the Loan Department of MHFC.
– How many civil servants have applied for mortgage loans within the 4000 Housing Units project so far?
– More than 3000 citizens have been granted access to long-term and low- interest rate mortgage loans totaling a whopping MNT 96 billion.
– It was decided that the mortgage loan interest rate is to be reduced to 6% APR. Is there any chance if the borrowers who had been previously granted loans at the rate of 8% APR could apply for reduction?
– It is still being discussed. We have not yet informed of any final decision. The current loan mortgage rate of 8% APR is the lowest rate offered in the market nowadays. The interest rates offered by other commercial banks are averaging at 15-16% APR which is twice more than the amount we offer. Once we receive the proper decision and guidance on the mortgage loan rate issues we will be able to say or do what is required. It is too early to comment more on the subject at this stage.
– The 100 000 Housing Units project will start to be implemented in the spring of this year but the mortgage loan rate has not been fixed yet?
– The 100 000 Housing Units project is a big part of “New development” program. We have not received any update regarding the final decision yet. Everybody would wish to make a mortgage loan application since the interest rate of 6% APR is the lowest loan rate to be offered in the market. Therefore, this time around the Government is focusing on granting mortgage loans to families living on the outskirts of the city.
– Mr D.Purevdorj, the president of Mongol Bank, said that the reduction in the mortgage loan interest rate will cause significant consequences in the economy of the country. On the other hand, there is a risk of it being considered as a social welfare benefit.
– Mr J.Aldarjavkhlan, the CEO of MHFC, commented that it is unacceptable to apply two different interest rates of 6% and 15% APR. It will depend on the pressures on the economy. The reduction in the interest rate to 6% APR is not some kind of benefit being offered. – The above mentioned loan mortgage will be given to citizen from both state and private entities. Citizens working in the private sector will avail grant to mortgage loans via given commercial banks. Other details regarding the loan service is not available to be obtained yet.
National Committee led by the Deputy Prime Minister of Mongolia is dealing with the issues regarding the loan interest rate and the final decision is expected to be made within this week
