1. HOUSING FINANCE MARKET
WORKSHOP
ON HOUSING FINANCE
HOUSING FINANCE MARKET
IN MONGOLIA
Ts.Enkhbayar
CEO, MIK
Ulaanbaatar, Mongolia

2. Content Housing condition Housing finance market
Achievements and Challenges
Future steps

3. Housing Condition Some Housing Statistics 2010 – result of Census
POPULATION
HOUSEHOLD
Ger
(45.2%)
House, apartment
(53.6%)
Other
8 136 (1.1%)
Ger
House,
apartment
Other
Urban
Total Urban household: (67%)
(32.7%)
(65.9%)
6 643 (1.4%)
Rural
Total Rural household: (33%)
(70.9%)
(28.5%)
1 493 (0.6%)

4. Ger Areas: Housing Areas: ● Ger – 322 836 (45.2%);
- Planning – not proper
- Water supply – kiosks (potable)
- Sewage – pit latrine
- Heating – stove using coal and wood
- Electricity – central system
- Social infrastructure – not sufficient
- Land ownership –yes
- Housing finance – savings, assistance from relatives and friends, loans
● Ger – (45.2%);
● Self built house – (29.4%);
Housing Areas:
- Planning –proper ,
- Water supply – central system
- Sewage – central system
- Heating – central system
- Electricity – central system
- Social infrastructure –sufficient
- Apartment ownership –yes
- Housing finance – mortgage loans, savings
● Apartment – (21.3%);
● Luxury detached house – (0.5%);
● Workers flat & dormitory (1.5%);
● Other public dormitory – (0.9%);
70%- Population;
59%- UB;
80-90% Provincial Towns;

5. Housing finance system development overview
Housing Finance Market
Housing finance system development overview
Before 1990s Top down system
Top down system
Financed by 100% state
Waiting list
Free housing delivery
Transitional period
Housing supply stopped
Housing law (1997)
State Housing policy
HFS needs
Enabling environment
Housing privatization
ADB project 3090
Some initiatives by private sector
2000s preparatory stage
Private investment started
Housing demand and supply study (ADB)
HFSP by ADB started
Kick off
Mortgage loans started in 5 banks
Loan portfolio 205 bln tug
Loan standards, documentation, database
MIK established 2006
HFC established 2007
Housing supply increased
Housing demand
2008 …. Development
Setting up mortgage legal envit.
Proper PMM infrastructure
Capital market development
Capacity building, Institutional strengt
Warehousing
Liquidity facility
Issuance MIK bond
4000 public empl. housing program HFC HP
Phased development approach

6. Mortgage market overview
Market indicators
2003
2004
2005
2006
2007
2008
2009
2010
2011.Q1
Total Debt Outstanding, mln.₮
8,199.6
19,018.1
30,839.7
74,318.4
164,625.9
217,098.1
226,040.6
333,776.6
375,101.6
Numbers of Total Borrowers
1,057.0
2,892.0
4,774.0
8,984.0
16,444.0
16,590.0
16,628.0
19,700.0
20,597.0
Market Interest Rate, %
12.0%
14.5%
14.7%
17.8%
16.0%
18.7%
17.7%
15.7%
14.8%
Mortgage market percentage of Systemic loan market, %
1.35%
1.81%
2.31%
3.33%
8.01%
8.27%
8.51%
10.72%
10.05%
Market growth
Market demand

7. Issues to be done for developing efficient mortgage market development
Legal environment
Mortgage law
Mortgage security
Pool registration Tax matter
Primary mortgage market infrastructure
Standardization of mortgage loans
Property appraisal
Mortgage database system
Mortgage insurance
Credit bureau
Capital market development Rating
Income verification system
Market environment
Political stability
Economic stability
Balance on Supply and demand
Creating domestic potential investor
Affordability
Capacity development
Institutional capacity
Coordination and linkages of market players
Quality of collateral
Efficiency of Urban planning, land development, construction quality
Effective operation and maintenance

8. Мongolian Mortgage Corporation (MIK)
Shareholders
Established
Main Goal
Promotion and development of primary and secondary mortgage markets by raising medium to long term funds on domestic and foreign capital market through a series of capital market tools to create and ensure s smooth functioning of long-term financing system to promote affordable home ownership and urban development for Mongolia’s people.
Why we established MIK
- Increase the affordability of the housing loan
- Stable structure for long term financing
- Liquidity facility
- Increase in housing mortgage market
- Need for capital market development

9. МIK acheivements: Healthy and well structured Institutional set up;
Total mortgage pool of purchase, 10.3 bln MNT; (PWR, PWOR)
MIK issued covered bond, 6.3 bln MNT;
MIK Bond listed as a repo financing instrument under Bank of Mongolia;
Standardized and documented origination and servicing;
Developed 2 Toolkits:
Mortgage loan; Micro housing loans
The shelf registration
Mortgage law, Asset backed securities law has been approved
Capacity development KfW project

10. МIK COOPERATION Projects:
KFW-Promotion of Mortgage Financing Mongolia project
IFC-Localization of Mortgage lending toolkit
IFC-Micro Housing Finance Project

11. Achievements Government policy and programs 40000, 4000, 100000
Funding support for Housing and housing finance
Supply side driven by private sector is growing
Housing finance system was set up-provite sector
Mortgage loan became one of the best financial product
Primary Mortgage market is in place
Secondary mortgage market does start up
The shelf registration -FRC
Legal framework was set up
Mortgage law, Asset backed securities law
The first OTC market initiative has been commenced
Mortgage loan standardization and documentation
Capacity building on mortgage market development
2009 онд МИК ипотекийн хоёрдогч зах зээлийн эрх зүйн орчинг бүрдүүлэх зорилт тавин ХЗДХЯ, Монголбанк, СЗХ, Сангийн Яам зэрэг төрийн байгууллагуудтай хамтран дараахь хуулийн ажлын хэсэгт орж ажиллалаа. Үүнд:
Үл хөдлөх хөрөнгийн барьцааны тухай хууль
Хөрөнгөөр баталгаажсан үнэт цаасны тухай хууль
Үл хөдлөх хөрөнгийн барьцааны тухай хууль ны өдөр батлагдсан бөгөөд одоогоор хуулийг хэрэгжүүлэхтэй холбоотойгоор Санхүүгийн Зохицуулах Хороо болон Улсын бүртгэлийн газартай хамтран Барьцаалбар үйлдэх журам болон барьцаалбарын маягт, бөглөх зааварын төсөл дээр ажиллаж байна.
Хөрөнгөөр баталгаажсан үнэт цаасны тухай хуулийн төслийг боловсруулах ажлын хэсэг хуулийн төслийг боловсруулан дуусч УИХ-д өргөн барьсан. Одоогоор хуулийн төслийн анхны хэлэлцүүлэг хийгдэж УИХ-р хэлэлцүүлэхээр шийдвэрлээд байна. МИК УИХ-ын хуулийн ажлын хэсэгт орж ажиллаж байгаа бөгөөд 2 дахь хэлэлцүүлгээр хуулийн төслийг оруулахаар саналын томъёолол бэлтгэх ажилд оролцож ажиллаж байна.
Дотоодын хөрөнгө оруулагчийг бий болгох эрх зүйн орчныг бүрдүүлэх үүднээс Нийгмийн даатгалын сангаас МИК-ийн үнэт цаасанд хөрөнгө оруулах нөхцөлийг бүрдүүлэх зорилгоор Нийгмийн даатгалын тухай хуульд нэмэлт өөрчлөлт оруулах тухай хуулийн төслийг боловсруулж Хөрөнгөөр баталгаажсан үнэт цаасны тухай хуультай хамт хэлэлцүүлэхээр УИХ-ын гишүүдээр хууль санаачлуулан ажиллаж байна. Мөн Санхүүгийн Зохицуулах Хороотой хамтран ажиллаж Даатгалын байгууллагын нөөц сангийн хөрөнгөөс МИК бонд худалдан авах боломжийг бий болгоод байна.
Анхны МИК бонд гарсантай холбогдуулан үнэт цаасыг СЗХ-д бүртгүүлэх ажлыг хийж гүйцэтгэсэн бөгөөд цаашид үнэт цаасны бүртгэлийн тогтолцоог илүү хялбаршуулах үүднээс ерөнхий бүртгэлийн /shelf registration/ тогтолцоог бий болгохоор ажиллаж байна. МИК бондыг ҮЦТТТХТ ХХК-д үнэт цаасны нэгдсэн бүртгэлд оруулж, ҮЦТТТХТ ХХК болон Санхүүгийн Зохицуулах Хороотой хамтран журам боловсруулах ажлын хэсэгт орж холбогдох журмыг батлуулахад оролцож ажиллаа.
Үл хөдлөх хөрөнгийн барьцааны тухай хууль батлагдсантай холбоотойгоор Монголын банкны холбоо дээр зохион байгуулагдаж ажиллаж буй нийт банкны хуулийн зөвлөхүүдээс бүрдсэн Үл хөдлөх хөрөнгийн барьцааны гэрээг стандартчилах ажлын хэсэгт орж ажиллаж байна. Цаашид банк зээлийн хөрөнгийг хялбар байдлаар бусдад худалдах, барьцаалах боломжийг нээж өгөх үүднээс Үл хөдлөх хөрөнгийн барьцааны гэрээнд заавал барьцаалбар үйлдэх, даатгалын асуудлыг тусгах санал гаргаад байна.

12. Challenges Lack of long term funding Low affordability rate
Capital market development- weak
Understanding of mortgage related business
Insufficient Mortgage infrastructure
Professional appraisal
Credit scoring
Mortgage insurance
Tax and accounting guidelines
IT infrastructure
MIK plays dual role:
driven force of mortgage market development;
Cope business development
Economic stability
There is no local institutional investors
Absence of clear PPP on housing finance

13. What we are looking for…?
Clear Government affordable housing and housing finance strategy
Needs strong explicit and implicit support by State (funding, guarantee)
PPP on housing and housing finance market development
Deepening secondary mortgage market
Needs long term funding that could relief mortgage loans from banks and convert into securities
Encouraging funding and equity investments by international financial institutions (EBRD, IFC, USAID, KFW….)
Domestic institutional investor (SSFund/pension fund)
Strong cooperation among relevant institutions

14. THANK YOU Mongolian Mortgage Corporation LLC /MIK/
MIK Building , United Nations street-38
Chingeltei district-4, 15160
Ulaabaatar, Mongolia
Tel: (976)
Fax (976)