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Presentation on theme: "2011. 06. 27 Ulaanbaatar, Mongolia HOUSING FINANCE MARKET IN MONGOLIA Ts.Enkhbayar CEO, MIK WORKSHOP ON HOUSING FINANCE."— Presentation transcript:


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

3 Housing Condition GerHouse, apartment Other Urban Total Urban household: 479 503 (67%) 156 744 (32.7%)316 116 (65.9%)6 643 (1.4%) Rural Total Rural household: 234 277 (33%) 234 277 (70.9%)66 692 (28.5%)1 493 (0.6%) Some Housing Statistics 2010 – result of Census POPULATION 2 754 685 HOUSEHOLD 713 780 Ger 322 836 (45.2%) House, apartment 382 808 (53.6%) Other 8 136 (1.1%) 3

4 Ger Areas: - 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 – 322 836 (45.2%); Self built house – 209 931 (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 – 152 338 (21.3%); Luxury detached house – 3 839 (0.5%); Workers flat & dormitory-10 334(1.5%); Other public dormitory – 6 356 (0.9%); 70%- Population; 59%- UB; 80-90% Provincial Towns; 70%- Population; 59%- UB; 80-90% Provincial Towns; 4

5 Housing finance system development overview Top down system Financed by 100% state Waiting list Free housing delivery Before 1990 s Top down system Housing supply stopped Housing law (1997) State Housing policy HFS needs Enabling environment Housing privatization ADB project 3090 Some initiatives by private sector 1990-2000 Transitional period Private investment started Housing demand and supply study (ADB) HFSP by ADB started 2000 s preparatory stage 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 2003-2007 Kick off 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 100000 HP Phased development approach 2008 …. Development 5 Housing Finance Market

6 6 Market indicators200320042005200620072008200920102011.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% Mortgage market overview 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 7

8 8 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 Mongolias 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 Shareholders Established 06.09.2006 Мongolian Mortgage Corporation (MIK)

9 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 9 МIK acheivements:

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

11 11 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 Achievements

12 – 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 12 Challenges

13 – 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 13 What we are looking for…?

14 THANK YOU Mongolian Mortgage Corporation LLC /MIK/ MIK Building, United Nations street-38 Chingeltei district-4, 15160 Ulaabaatar, Mongolia, Tel: (976) 11-328267 Fax (976) 11-313338

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