Almost 5% of mortgages are non-performing

Nearly 101,000 people took out mortgages worth 5.02 billion MNT in the first quarter of this year, reported Mongol Bank last Friday.

A breakdown shows that 75,570 borrowers received 3.75 billion MNT in mortgages with financing source from the government’s mortgage program with 6 percent interest rate, while the remaining were financed by banks (74.7 percent) and other sources (3.6 percent).

Out of all issued mortgages, 17 percent or mortgages worth 851.7 billion MNT were provided in rural areas. These mortgages were mostly financed by the program (76.2 percent), followed by financing by banks (21.7 percent) and other sources (2.1 percent).

Although nearly 90 percent of mortgages are performing normally, Mongol Bank warned that 1.3 percent was overdue and 4.8 percent non-performing. The central bank detailed that among the non-performing mortgages, 65.3 percent were financed by the program, 34.3 percent by banks and 0.4 percent by other sources.

In March, 1,870 individuals were granted 149.6 billion MNT in mortgages, with 71.5 percent funded by the program. The weighted average interest rate of mortgages was at 8 percent, decreasing by 3.5 percentage points year-on-year and 2.1 percentage points month-on-month.

Reportedly, 88.8 percent of mortgages were for housing under 80 square meters. Three out of four properties sold in March were built after 2011, making up 80 percent of total mortgages issued to date. Mongol Bank says 72.1 percent of borrowers and 57.9 percent of the outstanding mortgages belonged to individuals with monthly household income of up to 2.5 million MNT.