12 August 2022, Baku: In recent days, the media has been publishing unreliable information about the tightening of mortgage loan conditions by the Central Bank of the Republic of Azerbaijan for individuals owning residential area.

In this regard, we inform you that under the ‘Regulations on prudential standards and requirements for credit risks, including large credit risks’ approved by the Resolution of the Central Bank No. 29/1-2 dated 22 July 2022, the down payment requirement for real estate loans was not tightened, but softened.

Under the new Regulations, the loan-to-value (LTV) ratio requirement has been relaxed and increased from 70% to 85% (i.e., the down payment has been reduced from 30% to 15%) when a real estate loan is issued to an individual who does not own a residential area and is secured by the mortgage of that residential area. For other real estate loans, the LTV ratio requirement has been kept at a maximum of 70%, as applied since 16 November 2018. At the same time, note that the aforementioned requirements of the Central Bank apply only to internal real estate loans of banks.

Requirements for mortgage loans issued at the expense of the Mortgage and Credit Guarantee Fund of the Republic of Azerbaijan are governed by the ‘Regulations on granting mortgage loans, including preferential mortgage loans at the expense of funds of the Mortgage and Credit Guarantee Fund of the Republic of Azerbaijan’ approved by the Decree of the President of the Republic of Azerbaijan No. 940 dated 22 June 2016.