Yerevan/Mediamax/. German KfW bank will issue €20mln under the loan program of the German-Armenian Fund for “Stable Development of Mortgage Market”.

Mediamax reports that the corresponding agreement was signed by the Deputy Chairman of KfW Eva Witt and the Head of the Central Bank (CB) of Armenia Artur Javadyan in Yerevan today.

The loan is provided for the term of 10 years (with 3 years’ period of grace) at a discount interest rate, subsidized by FRG government (within the limit of 3% annual). The loan means are planned to be fully used in the course of 3 years with application of the basic principles of first two stages of KfW program mortgage crediting in Armenia.

Artur Javadyan reminded that 2 agreements were signed between KfW and the Armenian Central Bank in 2006 and 2007 on providing a loan of €12mln and a grant at the volume of €1.5mln for consultation purposes to the mortgage program of the German-Armenian Fund.

The loan means, received within the framework of the first two stages of the program have already been fully used.

At present, “Araratbank”, “Armeconombank”, “Areximbank”, “Inecobank”, “Byblos Bank Armenia”, “Armbusinessbank”, “Ardshininvestbank”, “Anelik Bank”, “Cascade Bank”, as well as “First Hypothec Company” and “Washington Capital” Universal Credit Organizations are the partners of the mortgage program of the German-Armenian Fund. Artur Javadyan informed that the number of the program partners will be expanded as a result of a competition selection. Banks and credit organizations will provide mortgage credits in AMD at market interest rates (12-16% annual), after which, if the crediting conditions are met, will receive AMD refinancing from the German-Armenian Fund. At that, KfW loan is issued in EUR.

“The interest rate, at which the Fund will refinance the issued mortgage credits, will make 8.25% annually; however, it may be reconsidered depending on the market conjuncture”, Artur Javadyan stated. The issue of credits under this program will be initiated within 3-4 months.

Deputy Chairman of KfW Eva Witt stated that, by providing the loan, the German Bank first of all intends to contribute to development of dwelling construction and mortgage market in the regions of Armenia and this is why the maximum volume of credits, issued within the framework of the program, will be within the limit of 12mln AMD.

“We welcome the readiness of the Armenian government to take upon itself the currency risks, accepting KfW loan in EUR and crediting the population in AMD. Not every government takes up such a step”, Eva Witt stated.