Most peo­ple, es­pe­cially the youth, are in­ter­ested in tak­ing part in the state's low-in­ter­est mort­gage pro­gram...

Most peo­ple, es­pe­cially the youth, are in­ter­ested in tak­ing part in the state's low-in­ter­est mort­gage pro­gram. The af­ford­able mort­gage pro­gram is con­sid­ered to be cru­cial to re­duc­ing Ulaan­baatar’s air pol­lu­tion by al­low­ing ger dis­trict residents to move into apart­ments.

In Ulaan­baatar, new apart­ments for over 30,000 residents have been built and are now wait­ing for buy­ers. Fi­nan­cial chal­lenges face real es­tate de­vel­op­ers and con­struc­tion com­pa­nies when there is an im­bal­ance in sup­ply and de­mand caused by a na­tion’s eco­nomic down­turn. The gov­ern­ment must pur­sue fi­nanc­ing to con­tinue the mort­gage pro­gram and ex­e­cute a smart pol­icy to ex­pe­dite the tran­si­tion of city residents from ger dis­trict hous­ing to the empty apart­ments that are wait­ing for them.

Mon­gol Bank is­sued 35 bil­lion MNT in loans to 481en­treprenuer­s in Oc­to­ber 2016, 23.8 bil­lion MNT in loans to 258 en­trepreneur­s in De­cem­ber 2016, and 47.8 bil­lion MNT in loans to 750 en­trepreneur­s in Fe­bru­ary 2017.

Mon­gol Bank re­cently changed its mort­gage loan reg­u­la­tions. Un­der pre­vi­ous reg­u­la­tions, Mon­gol Bank is­sued mort­gage loan fi­nanc­ing to com­mer­cial banks with­out the re­quire­ment of a thor­ough ap­pli­ca­tion ap­proval process. Un­der the new reg­u­la­tions, af­ter re­ceiv­ing and re­view­ing doc­u­ments sup­port­ing mort­gage loan ap­pli­ca­tions, com­mer­cial banks will then be able to ask Mon­gol Bank to is­sue mort­gage loan fi­nanc­ing for el­i­gi­ble ap­pli­cants.

Mon­gol Bank spokesper­son D.Ari­u­naa said that mort­gage loans have shrunk be­cause Mon­gol Bank is is­su­ing fi­nanc­ing at the re­quest of com­mer­cial banks, and noted that 25 bil­lion MNT is be­ing is­sued each month.

She stated that once Par­lia­ment ap­proves the amend­ments to the 2017 state bud­get put for­ward by Cab­i­net, Mon­gol Bank will have the author­ity to send fi­nanc­ing to com­mer­cial banks in 2017, but that Cab­i­net will be in charge of mort­gage loan fi­nanc­ing from 2018 and on.

The In­ter­na­tional Mone­tary Fund (IMF) has ad­vised that Mon­gol Bank does not need to be in charge of mort­gage loan fi­nanc­ing, but a so­lu­tion needs to be de­vel­oped as the Gov­ern­ment of Mon­go­lia is look­ing to take ad­van­tage of mort­gage loans to ad­dress ru­ral-to-ur­ban mi­gra­tion and to con­tinue ger dis­trict re-plan­ning ef­forts in Ulaan­baatar.

Min­is­ter of Con­struc­tion and Ur­ban De­vel­op­ment G.Munkhba­yar em­pha­sized that the Gov­ern­ment of Mon­go­lia is ne­go­ti­at­ing with Asian De­vel­op­ment Bank to help build houses in ger dis­tricts, prov­inces, and soums by fi­nanc­ing mort­gage loans. He noted that peo­ple build­ing houses are el­i­gi­ble to ap­ply for mort­gage loans with ap­proved blue­prints for houses that are 45 to 80 square me­ters.

An­other hous­ing mea­sure be­ing pur­sued by the gov­ern­ment is the State Rental Hous­ing Pro­gram. House­holds with a reg­u­lar income but not enough sav­ings to buy an apart­ment are el­i­gi­ble to reg­is­ter for the pro­gram. Af­ter reg­is­tra­tion for the pro­gram is closed, ap­pli­cants will be se­lected through a ran­dom lot­tery process for place­ment in avail­able rental prop­er­ties.

The se­cond round of reg­is­tra­tion for the State Rental Hous­ing Pro­gram will be car­ried out from March 31 to April 1. A lot of peo­ple are wait­ing to reg­is­ter for the pro­gram.

Gen­eral Di­rec­tor of the State Hous­ing Cor­po­ra­tion (SHC) J.Hicheen­gui em­pha­sized that rental hous­ing reg­u­la­tions were changed by or­der of the Min­is­ter of Con­struc­tion and Ur­ban De­vel­op­ment in Fe­bru­ary. He stated that un­der the new reg­u­la­tions, the lot­tery process was can­celled and a pri­or­ity se­lec­tion process will be car­ried out. The SHC will col­lab­o­rate with the Min­istry of Con­struc­tion and Ur­ban De­vel­op­ment (MCUD) to pri­or­i­tize ap­pli­cants ac­cord­ing to age, income, and other fac­tors de­ter­min­ing their need for ac­cess to af­ford­able rental hous­ing.

The first es­sen­tial re­quire­ment for a house­hold ap­ply­ing for the pro­gram is that their house­hold income must be twice as much as their monthly rent. Pub­lic ser­vice em­ploy­ees, peo­ple liv­ing with dis­abil­i­ties, fam­i­lies with four or more chil­dren un­der the age of 18, pen­sion­ers, newly mar­ried cou­ples un­der the age of 35, and other re­cip­i­ents of state wel­fare are con­sid­ered to be pre­ferred ap­pli­cants for the rental hous­ing pro­gram.

Rent for th­ese apart­ments will be 6,000 MNT per square me­ter, so monthly rent for a one-room apart­ment of 45 square me­ters will be 270,000 MNT, which is lower than the market rate.

Peo­ple want a fair se­lec­tion process, so the SHC and MCUD need to carry out a trans­par­ent ap­pli­cant se­lec­tion process. Com­mer­cial banks and Mon­gol Bank need to work to­gether to pro­vide qual­i­fied peo­ple with mort­gages. The prob­lem is that the banks are re­luc­tant to ap­prove loans and mort­gages by asking for a num­ber of re­quire­ments from bor­row­ers, in fear of driv­ing peo­ple to give up on ap­ply­ing for any loans at all.

Mon­gol Bank, com­mer­cial banks, the SHC, and MCUD must pub­lished in­for­ma­tion about trans­par­ent pro­cesses on their web­sites, of­fer­ing open ac­cess to any­one who wants to re­view how de­ci­sions about hous­ing pro­grams are made in re­gard to ap­pli­cant se­lec­tion.

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