Central Bank Vice President says reducing prepayment of mortgage loan is inappropriate

YEREVAN, FEBRUARY 7, ARMENPRESS. Nerses Yeritsyan, Vice-President of the Central Bank of Armenia commented on the possibilities of decreasing the pre-payment for acquiring apartments through a mortgage loan.

During parliamentary debates on the draft law on “Mortgage crediting for apartments”, Nerses Yeritsyan responded to MP Vahram Mkrtchyan’s question, and as an example cited the experience of developed countries, where rather decreasing the pre-payment, institutional mechanisms are created in order for people to make savings during a year, specify his incomes and then only apply for a loan.

“This must become a normal behavior among people for taking a loan. This is the meaning of the pre-payment. Our perception of the pre-payment is simply different. Our perception of the pre-payment is that someone must find money from somewhere , pay the 30% pre-payment in order for the bank to provide the loan”, Yeritsyan said.

He added that the 30% pre-payment is the indicator of how much risk the borrower bears of repaying the mortgage loan during 10 years. “The price of apartments might change, interest rates might change, therefore the ability of savings is the basis of taking a mortgage loan. In contrary, I think we must make that 30 or 20 % pre-payment the result of people’s savings, in order for the loan not to become a burden for our citizens afterwards”, he said.

He added that from this perspective there is necessity to work with citizens, consumers, for which the Central Bank has a program and is moving forward step by step.