by Elita Babayan
Development of the mortgage lending market in Armenia is possible if a mortgage securities market is created in Armenia, said Tatevik Badalyan, Head of the Retail Business Department at VTB Bank (Armenia), when commenting on stagnation of the real estate market in Armenia to ArmInfo.
Securitization of mortgage bonds is a universal mechanism of long-money inflow into the housing construction sector that will keep stability in mortgage and housing refinancing in the country. T. Badalyan said that mortgage securities market is not likely to develop in the visible future due to the social-economic and demographic problems in the country and growing migration scales.
According to Badalyan, the cost of dollar resources in the banking market of Armenia remains high so far, as there are no 'dollar' mortgage programs implemented by the funding organizations (such as National Mortgage Company) and limited number of relevant international programs.
"Reduction of interests on mortgage loans in US dollars will become possible as soon as there is more supply of foreign currency inexpensive resources in the market by funding organizations," the expert explained.
Badalyan said that mortgage lending is one of the most important dimensions of retail business development of VTB Bank (Armenia), but at the same time, it is a very low-margin product in the bank's product line.
"The reason is that having the widest customer base in the country - nearly 400,000 private customers - the bank has set a goal to satisfy the needs of customers in the basic credit, deposit and card products," she said. The real estate market experts say that the only way to reanimate the market today is to reduce the interests on dollar loans at least by 3%-4% without essential loss of the margin.
According to the Ranking of Armenian Commercial Banks prepared by ArmInfo Agency of Rating Marketing Information, the total mortgage portfolio of Armenian banks as of 1 Jan 2014 was 144 bln drams ($355 mln) with 12% growth versus the same period of 2013. Over the last two years, mortgage lending in Armenia has grown by 1/3 and by 60% over the last three years. The share of VTB Bank Armenia in total mortgage portfolio of Armenian banks for 2013 was nearly 16 bln drams (the second position in the market).