Baiterek Holding intends to subsidize mortgage interest rates

Kanat Sharlapayev, Chairman of the Board of Baiterek Holding, has taken the initiative that will help Kazakhstan citizens purchase apartments.

On July 5, 2022, the head of Baiterek Holding announced a new housing policy during a meeting of the Government of the Republic of Kazakhstan.

Firstly, he proposed to use akimats’ bond funds not only for the construction of credit housing but also for the renovation of old and dilapidated housing.

Kanat Sharlapayev stated that funding could be provided at 4.25% per annum for up to 2 years. For this purpose, 180 billion tenge allocated by the National Bank in 2020 will be used. The money is to be returned in 2024; therefore the deadline for the return of this money must be extended until 2030.

– It will allow us to renovate about 45 thousand apartments around the country. The Concept of Housing and Communal Development has been preliminarily amended and sent to the Ministry of Industry and Infrastructure Development, – said Kanat Sharlapayev.

Next year, the 7-20-25 mortgage program will end. It means that 35 thousand apartments worth of 500 billion tenge will probably not be sold. Sales of commercial housing may fall. To prevent it from happening, it is proposed to subsidize the interest rates for mortgage programs that are being offered by second-tier banks.

Baiterek Holding and the Association of Financiers of Kazakhstan came up with the following basic conditions: a down payment of 20%, a maximum loan term of 20 years, a maximum loan amount of 35 million tenge; a proof of solvency must be provided.

– 7% of the mortgage interest rate will be subsidized; the interest rate must not exceed the basic interest rate set by the National Bank by more than 5%. Second-tier banks will be able, at their own expense, to issue loans for housing, guaranteed by the Kazakhstan Housing Company JSC, – stated Kanat Sharlapayev.

According to him, the laws don’t need to be amended for the subsidizing program to be launched. The application for budget money is being reviewed by the Ministry of Finance. Once the budget is approved, the Kazakhstan Housing Company will start implementing the program immediately.

In the first half of 2022, the akimats were provided with 126.4 billion tenge through the redemption of bonds. The money is intended for the construction of credit housing. By the end of this year, 162.2 billion tenge worth of bonds of local executive bodies will be redeemed.

In the first half of 2022, 38.9 thousand preferential loans for 649.7 billion tenge were issued. Otbasy Bank has concluded 2.39 million contracts worth of 1.89 trillion tenge.

Fifteen projects of shared housing construction were guaranteed for 97 billion tenge; 589 thousand square meters of housing have been constructed. This made it possible to protect the deposits of 7,000 citizens.

3.5 billion tenge worth of real estate developers’ loans were subsidized; ​​170 thousand square meters of housing have been constructed.

On behalf of the President, the rent of private housing is being subsidized. Otbasy Bank has already approved more than 6 thousand applications. One can apply on the otbasybank.kz website using a digital signature. An applicant must be a citizen of Kazakhstan and meet the program’s requirements.

When considering a mortgage application, social payments and benefits are considered income, along with salaries and business revenue. Because of it, more than 1,000 applications have already been rejected. Kanat Sharlapayev insisted that this situation had to be changed.

– We are amending the relevant legal acts so that social payments and benefits will not be considered income. This will allow people who were previously refused to re-apply and qualify for subsidies.

In order to finance the program implementation, the Holding is working with local executive bodies. Out of 17 regions: money was received from one region, agreements were signed in five regions, eight regions are signing agreements on money transfer, and maslikhat sessions have not been held in three regions.

Kanat Sharlapayev has also mentioned the Housing Center electronic database, which is being developed by Otbasy Bank. The system will help maintain waiting lists of housing recipients.

The new system will combine 18 state databases. Currently, software and infrastructure are being tested. Then the system will have to be certified by the State Technical Service. As of today, the system is 60% ready. It is expected to be launched in August 2022.

– To launch the Housing Center electronic database, we need to reform the housing policy and provide the Bank with the current waiting lists. Then we will need to test the database for about 120 days, – explained the Chairman of the Board.

In conclusion, Kanat Sharlapayev said that in the first half of 2022, all goals in housing construction were achieved. The Holding will continue working in this direction.