203.2 billion MNT expended for mortgage program as of September

With 143.7 billion MNT from Mongol Bank and 59.6 billion MNT from Cabinet, a total of 203.2 billion MNT has gone towards providing mortgage loans to 2,724 individuals in the first nine months of 2018.

In September, the central bank expended 16 billion MNT for the mortgage program, providing loans to 239 individuals.

In May of 2018, a study by Mongol Bank on the eight percent interest mortgage program indicated that 93,099 households had received mortgage loans under the program. Mongol Bank has experienced a deficit of three trillion MNT due to the mortgage program in the last four years, said Head of the parliamentary Economic Standing Committee D.Damba-Ochir at a recent meeting of the committee.

“Even though the mortgage program is being financed with 340 billion MNT, it is nowhere near enough. The distribution of the mortgage loan has become difficult,” said D.Damba-Ochir.

Outstanding debt under the mortgage program had reached 4.2 trillion MNT in May. The majority of the debt, or 95.7 percent, is classified as stable, 2.4 percent is overdue, and 1.9 percent has been classified as non-performing.

In March 2018, 497 debtors received loans of 49.5 billion MNT. The average interest rate of those loans is 11.9 percent. One debtor receives on average 78.3 million MNT.

The majority, or 69.3 percent, of the 93,099 households have an income of two million MNT or less. Around 90 percent of the loans have been used to purchase apartments 80 meters per square and less.

Moving forward, Mongol Bank will be slowly detaching its involvement in the mortgage program. The new Law on Central Bank severely undercuts the central bank’s ability to get involved in quasi-fiscal activities such as the mortgage program. IMF had a hand in consulting with the Mongolian government on prohibiting the body that prints and issues the tugrug from becoming involved in government fiscal programs.