The UB Post
HOW ARE OUR HOUSING PROGRAMS GOING?
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.