Several Kazakh banks cease issuing mortgage loans in tenge

Several Kazakhstan’s banks have ceased issuing mortgage loans in tenge, Tengrinews reports. According to the banks, this has nothing to do with devaluation expectations and is connected to loan terms revision. However, they offered no explanation as to why the massive revision of the terms became necessary. 

According to call-centers of Kazakhstan’s banks, mortgage loans in tenge are not issued now in three banks: Kaspi Bank, Kazkommertsbank and Temirbank.

Call center of Kazkommertsbank said that mortgage loans were issued only in US dollars, because interest rates in tenge were being revised. However, the press services of the bank refuted this information.

As for Kaspi Bank, it explained that no mortgage loans were issued in either tenge and US dollars, because the bank had not had this service since 2008.

Temirbank also does not accept any applications for mortgage loans either in tenge or US dollars because of the ongoing merger of the bank with Alliance Bank and Forte Bank. The bank only offers consumer loans of up to 3 million tenge.

CenterCredit Bank, Alliance Bank and Bank RBK are the only banks in Kazakhstan that continue issuing mortgage loans both in tenge and in US dollars. The rest of the Kazakh banks - Eurasian Bank, Zhilstroysberbank, ATF Bank and Nurbank and others - offer mortgages only in tenge, while Kassa Nova Bank provides mortgage loans only in dollars.

Besides, all these Kazakh banks continue to issue unsecured consumer loans in tenge on the same terms as before. However, some of them give out personal loans in dollars.

As for Russian banks operating in Kazakhstan, Sberbank has ceased to accept new applications for mortgage loans in tenge because of loan terms revision. The bank explained the need to revise the terms of the loans in tenge was related to high volatility of the global economy. However, Sberbank assured that despite the suspension all the previously approved mortgage loans in tenge would be issued in time and on the agreed upon terms.

Meanwhile, head of Analytics Department of Asyl Invest investment firm Aivar Baikenov believes that the banks ceased issuing mortgage loans because of pure greed.

“The main factor in the suspension of mortgage issuing in Kazakhstan is, roughly speaking, the greed of the banks themselves. Now, as you know, the repo rate (a rate at which central bank repurchases securities from commercial banks) as grown to 50-60 percent per annum, and at this point the banks in Kazakhstan realize that they either issues a mortgage loan at 12 to 20 percent per annum, or invest at the financial market and earn 40-50 percent annually. As a result, they channel part of their tenge-denominated funds into transactions at the financial market," the analyst said.

In addition, the expert noted that banks in Kazakhstan were experiencing a shortage of tenge. "Financial institutions do not have enough tenge and, generally, active lending is not possible. Their main source of funding comes from deposits. Many (in Kazakhstan) have been switching from depositing their money in tenge to deposits in foreign currency (dollars). This created a currency imbalance and decreased the (banks') tenge liquidity. Since the situation has not been changing, the trend may continue and the share of foreign currency deposits will keep growing. In this situation, many banks believe that it wise not to take extra risks and prefer to to hold on to the tenge they have," Aivar Baikenov said.

He added that should other banks in Kazakhstan stop issuing mortgage loans and the average interest rate on mortgage loans reach 17-20 percent (now the average rate is at about 15 percent), then the real estate prices in Kazakhstan, in particular, those of business and premium class housing may go down by 10 percent. According to Baikenov, the suspension of mortgages and increase of the rates will not affect the cost of cheap housing of economy class very much - the price may go down by 5 percent at most, he said.

Reporting by Azhar Ashirova, writing by Assel Satubaldina, editing by Tatyana Kuzmina