Experts forecast mortgage lending revival in Kazakhstan06 may 2014, 13:53
Tengrinews correspondent has spoken to experts about the possibility to revival of the now stagnant mortgage lending in Kazakhstan.
MFX Broker financial analyst Sergey Nekrasov believes that mortgage lending in Kazakhstan will recover only in 2016. And that it has to do with the recent news that the National Bank of Kazakhstan, the country's central bank, is going to raise the minimum equity capital requirement for the banks. This will force the financial institutions to merge to increase the available capital. "The consolidation is likely to take several years, after that larger banks that are able to meet the new standards of the National Bank will start extending mortgage loans," the analyst said.
Alpari senior analyst Anna Bodrova does not preclude that banks will resuming mortgage lending as early as by the end of 2014, or, at least in the first quarter of 2015. "It's all about the economic stability and ability of a bank to get access to longer term money. In the period between January and March 2014 the mortgage market in Kazakhstan contracted by 0.5 percent. Until the end of the year the decline might reach 0.6-1.0 percent,” Bodrova said. She explained this by pointing to the emergence of smaller banks that are willing to offer mortgage loans at five percent on special terms to win market shares from the big banks.
Finam Management company’s analyst Maxim Klyagin said that in 2013 the mortgage market in Kazakhstan were developing rather dynamically. It grew by 10 percent in one year, he said. "However, the situation has deteriorated in 2014 amid the generally difficult macroeconomic environment. In particular, the devaluation of tenge (by nearly 20%) in the beginning of this year has had its share of the negative impact on the industry, primarily due to changes in the composition of household expenditure amid accelerating inflation, growth of rates and lower demand for housing loans," he said. Klyagin called the inflation rate in first quarter of 2014 a moderate one, which led him to assume that the mortgage market growth rates this year were likely to remain similar to 2013.
The mortgage market in Kazakhstan is virtually stagnant now. One of the largest banks in Kazakhstan - Kazkommertsbank - suspended extension of mortgage loans altogether in the middle of 2013. Most Kazakhstani banks stopped mortgage lending in the middle of September 2013 due to the lack of long-term money and in anticipation of the increased minimum capital requirements.
Reporting by Azhar Ashirova, writing by Dinara Urazova, editing by Tatyana Kuzmina