Interview of the Executive Director of “National Hypothec Company” UCO Mher Yedigaryan to Mediamax Agency and Banks.am portal

- The National Hypothec Company (NHC) has already been functioning for half a year. What results have you achieved in this period?

- As of now, we have refinanced about 300 mortgage loans for the total sum of 2bln AMD. At present, our partner financial establishments consider issues of providing loans at the sum of 450-600mln AMD, which, we expect, will be refinanced by the end of the year. Thus, by the end of the year we plan to make our portfolio reach 2.5bln AMD, which, I think, is not a small figure for the first six months.

The most important result of the company’s activity is the signal, sent to the Armenian mortgage market. And although this market was experiencing certain difficulties, NHC’s arrival inspired the market participants with confidence and proved that the market functions and possesses potential. As a result of mortgage crediting, both companies cooperating with us and other banks and credit organizations, stirred up. 

Indeed, the Armenian mortgage market has not yet reached the pre-crisis indices, but it is already nearing them.

- What initiatives will NHC put forward in 2010?

- Next year we intend to work with the same speed, realize large-scale lending and expand our range of tools.

We constantly revise the conditions for refinanced loans and try to present products, which enjoy the most demand, to the market.

Prolongation of refinancing terms is among issues on the agenda. Today, NHC realizes refinancing within 90 days after the loan issue. If the bank or the credit organization makes a decision to issue a loan, refinanced by us, to a person, who is purchasing an apartment in a building, which is yet in process of construction, the latter, should pawn other property, besides the one, which is being purchased. The experience has provided that many customers lack the opportunity to pawn other property, and this is why their loan cannot be refinanced.

For such cases, we will offer to prolong the refinancing date from 90 days to 6-9 months, which will provide the borrower with time to pawn real estate in the new building.

We plan for certain changes also concerning refinancing loans for real estate repair. At present, we refinance loans with the repayment term of 10 and more years, which is not convenient for borrowers, whose demand makes only 2-3mln AMD. This is why we discuss the opportunity of reducing the requirements of the minimum loan repayment term from 10 to 3 years.

One more change, which we will implement in the nearest future, is related to the sum of the refinanced loans. At present, we refinance loans at the sum of up to 20mln AMD. Now we discuss issues of increasing the sums of the refinanced loan, as well as co-financing in case of larger loans.

Banks and credit organizations often refuse to provide more than 20mln to the borrower, since such loans are not refinanced by us.

By allowing banks providing larger loans to receive refinancing of their part by us, NHC will solve this problem and thus will significantly increase the circle of potential borrowers.

- At the moment of establishment, the company’s capital made 5bln AMD. Besides, the company was provided 12bln AMD from the Russian stabilization loan. Are there works in process to replenish the capital?

- NHC was established basing on the principle of cooperation between the state and the private sector, and the works on attracting private investments are in process constantly.

Investors need time to make sure in development and successful activity of the company. We realize the small probability of attracting foreign investments into the company’s capital in the short-term prospect. Everything depends on the efficiency of our work.

Besides, we intend to attract means also from the capital market and now we are actively dealing with this issue. In 2010, we plan to realize at least one issue of bonds.

- At present, the company refinances mortgage loans, issued at the minimum prepayment of 30%. Are there perquisites to ease the conditions?

- The 30% prepayment is in effect if only one item of property is pawned.

Three months ago we implemented a new condition, according to which, if the person pawns 2 items of property, the size of the prepayment is reduced to 10%. Here we talk about cases, when both the real estate being purchase and the one already possessed, are pawned. 

- How many financial organizations does the company cooperate with?

- At present, we cooperate with 10 banks and 2 credit organizations. In the nearest future, we plan to conclude cooperation agreements with 2-3 more companies.

- Three months ago, the company made a decision to reduce the refinancing rate by banks from 9% to 7.5%. Are there perquisites for a new reduction of rates?

- Everything depends on general economic developments, in particular, developments in the financial market. The refinancing rate will continue reducing if the general reduction of market rates takes place, as well as if NHC enters the market of bonds.