Home mortgage rates lowered to 6 percent
Mongolia has lowered the interest rates on home loans from 8 per cent to 6 per cent, according to an announcement made by Minister of Construction and Urban Development B.Munkhbaatar.
Banks reportedly began offering home loans at the reduced rate last Friday.
Munkhbaatar also said that household income must be at least MNT 1 million per month (US$350) to qualify for the reduced rate. There are conflicting reports about whether people on the 8 per cent rate will be able to refinance down to 6 per cent.
The rate reduction reportedly aims to help residents of Ulaanbaatar’s sprawling ger districts to access housing.
Some estimates say that up to 62 per cent of Ulaanbaatar’s population live in the ger districts, with poor access to water and sewage systems and no central heating. The lack of power and heating is the main contributor to Ulaanbaatar’s notorious winter air pollution, as residents are forced to burn raw coal to stay warm.
Of Mongolia’s 900,000 households, around 100,000 have a mortgage. Banks have previously required a minimum of MNT 1.5 million of monthly income and a 30 per cent deposit to qualify for a loan - a standard that was criticised for preventing affordable access to finance.
In a statement released to press, Munkhbaatar said that his ministry will also introduce a state-owned rental housing program ‘in the future’.
If you enjoy our articles, you'll really enjoy our weekly newsletter. It's crafted by specialist journalists and experts based in Ulaanbaatar and around the world and delivered straight to your inbox.Try it for free and cancel any time - just follow this link.