Changes have been made to the rules for granting mortgage loans from the funds of the Mortgage and Credit Guarantee Fund in Azerbaijan. The relevant decree was signed by President Ilham Aliyev. According to the amendment, a new category has been added to the list of persons entitled to concessional mortgage rights.
This change indicates that support mechanisms aimed at civil servants are being gradually expanded within Azerbaijan's socio-economic policy. Particularly, social security instruments such as mortgage loans are used in the country both to solve the housing provision problem and to maintain staff stability in strategic professions. On the other hand, this decision can also indirectly affect the housing market. The expansion of concessional mortgage opportunities can increase demand for certain categories, thereby increasing activity in the market.
Although mortgage loans have long been presented as one of the main tools for solving the housing problem in Azerbaijan, the accessibility of this mechanism is not at the same level for all segments of society. While official programs and state support exist, real market conditions still turn mortgages into a difficult financial instrument for many citizens to obtain.
One of the main problems is the initial payment burden. According to existing mortgage conditions, citizens must pay a certain portion of the housing value in advance. This creates a serious obstacle for middle-income families. Especially, the high real estate prices in large cities like Baku increase this burden even further.
Another important factor is the ratio of monthly payments to income. In many cases, there is a significant mismatch between the official salary level and the monthly payments of housing loans. This situation formally allows access to mortgages but practically restricts it.
The risk policy of the banking sector is also one of the main elements affecting accessibility. Requirements such as credit history, official income documents, and stable employment exclude a large group of the population from the system. As a result, mortgages are almost inaccessible to citizens who earn informal income or work freelance.
Although the state's social mortgage programs offer concessions for certain groups, this does not fully solve the scale of the general problem. On the contrary, differences between various categories within the system are also observed to increase. Consequently, while the mortgage market may appear to be existing and functional formally, its real accessibility is limited by serious socio-economic factors. This necessitates thinking about solving the housing problem not only through credit mechanisms but also alongside overall income policy and regulation of housing prices.
Medianews.az reports that Gunay Ismayilqizi, Deputy Chairperson of the Azerbaijan Appraisers Chamber (AAC), shared her opinion on the topic with Musavat.com: “The expansion of the list of persons benefiting from concessional terms on mortgage loans granted from the funds of Azerbaijan Mortgage and Credit Guarantee Fund is an indicator of a consistent and systematic approach in the state's socio-economic policy, and this step is particularly significant for strengthening the social security of personnel working in strategically important sectors. Mortgage mechanisms have evolved beyond being merely a social protection tool to becoming an integral part of economic policy. Through these tools, the state both supports the housing provision of the population and stimulates economic activity. The expansion of the scope of concessional mortgage rights not only increases social inclusiveness but also provides additional incentives for individuals working in priority directions in the labor market to stay within the country and continue long-term activity. The adopted decision will cause a balanced revival in the real estate market. Such decisions form a more structured and sustainable demand without causing sharp fluctuations in the market. In particular, an increase in interest in apartments in the medium price segment in the primary housing market and new buildings is expected. However, there are limited fundamental reasons for a sharp rise in prices. Because the expansion of the mortgage portfolio is carried out within the state’s fiscal and monetary frameworks, balance in the market is maintained.”
According to the AAC official, this change will also have an indirect positive effect on the construction sector: “The more predictable and sustainable nature of demand expands the planning capabilities of construction companies. This facilitates the phased implementation of projects, reduces risks in the construction of new residential complexes, and overall creates conditions for healthier development of the sector. The expansion of mortgage lending further increases the role of the appraisal institution. Accurate and objective determination of the value of real estate is one of the main pillars of the mortgage process. In this regard, the Azerbaijan Appraisers Chamber, as an official professional body, places special importance on applying international standards in appraisal activities, improving the methodological base, digital management, and increasing transparency. Alongside the expansion of the mortgage market, the inevitable increase in demand for appraisal services also accelerates the institutional development of the sector.”
Our interviewee noted that the expansion of social mortgage programs creates an uplifting effect in several segments of the economy in the long term: “Improvement in housing provision directly affects the welfare of the population. At the same time, it strengthens economic relations among the banking sector, construction industry, and related fields. This can also positively affect the increase of the non-oil sector’s share in the formation of the gross domestic product. This decision also acts as a positive signal for market participants. The continuous expansion of social mortgage instruments by the state increases confidence among investors and market entities, stabilizes expectations, and encourages long-term planning. Consequently, such decisions serve complex and sustainable development goals both socially and economically.”