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Kazakh home-buyers get new loan options
EBRD lends $10 mn to Kazakh mortgage firm to boost funding for individuals
The European Bank for Reconstruction and Development is lending $10 million
over 10 years to Kazakhstan’s JSC BTA Ipoteka, the country’s only specialised
mortgage bank. This is the first loan to a Kazakh financial institution with
such a long maturity. The money will be lent on to individuals buying or
repairing their homes. This financing will both promote the development of a
key banking product for individuals and support the housing market, especially
outside Kazakhstan’s two most important cities, Almaty and the new capital,
Astana.
Kazakhstan’s mortgage market has tripled in size every year in the four years
since major banks began lending money for property purchases. Forecasts
suggest the market will be $1.5 billion by 2008, and that the proportion of
house purchases financed with mortgage loans will by then be 30 per cent (this
compares with a developed-economy norm of 80 per cent of housing transactions
being financed through a mortgage). Among factors stimulating the market are
government and national bank support, a good regulatory environment, a new
government mortgage insurance company and a housing construction development
programme.
BTA Ipoteka, a subsidiary of Kazakh bank JSC Bank TuranAlem, has become one of
the four biggest mortgage providers in the country since it was set up in
2000. Its portfolio grew from $12.2 million in 2002 to $160 million by
end-2004 despite limited long-term financing. As the market expands over the
next two years, it intends to raise its market share to around 27 per cent.
To do this it will both expand geographically and develop more flexible
products. BTA Ipoteka plans to make at least half of its loans outside Almaty
and Astana by the end of 2007.
These goals require long-term funding not readily available in the Kazakh
market. The EBRD loan, which will ensure that BTA Ipoteka continues to apply
western standards for lending and environmental screening, is in line with the
Bank’s strategy for Kazakhstan, which calls for further development of the
mortgage, leasing and insurance markets.
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