Kazakh National Bank presents consumer-friendly home loan programme

ASTANA – The Kazakh National Bank recently presented the 7-20-25 mortgage programme, which will provide soft conditions for every citizen with official income to purchase housing. The plan was initiated by President Nursultan Nazarbayev to provide sufficiently lower 7-percent interest rates (compared to the average 14-16 percent mortgage loans offered by private banks) with a 20-percent down payment and 25-year loan.


Photo credit: kn.kz

The programme, to be managed by a bank subsidiary, will have four main stages. The first phase includes a mechanism to secure mortgage loans by maximising the opportunities of banks and the stock market, noted National Bank Chairman Daniyar Akishev.

“In the near future, National Bank will create a 100-percent owned subsidiary which will manage the loan programme. The capital of the new company will be formed at the expense of National Bank. The capital will be necessary to raise funds from the financial market under market conditions for repurchase of new mortgage loans granted by banks under the 7-20-25 formula. This is the securitisation mechanism,” he said.

The second stage includes company recognition by a financial agency to effectively implement the programme.

“This means the same taxation as for government securities will be used for the company’s bonds. The National Bank will submit necessary legislative amendments to the government in March,” he added.

The third phase will provide new opportunities to purchase real estate with preferential terms.

“The financial conditions of the programme require the solvency of future borrowers. Any Kazakh citizen who has an official income can take part in it. The criteria are now being worked out with banks. For example, if the cost of housing is seven million tenge (US$21,700), a monthly payment will not be more than 50,000 tenge (US$155), which is generally acceptable for most working people of the country,” said Akishev.

The fourth stage indicates preferential mortgage loans must be fully secured and absolutely refundable.

“It will be necessary to revise certain norms introduced in recent years which made mortgage lending unattractive. The National Bank will also forward the necessary legislative amendments to the government for consideration,” he said.

Akishev added the parameters are preliminary and will continue to be discussed with interested state bodies and banks.

“It is very important to take into account the opinion and interests of local executive bodies concerning increasing the availability of housing in the regions. Under these conditions, the measures and implementation deadlines, which are outlined in the roadmap for the implementation of the Five social initiatives of the Kazakhstan President, are supported by us and provide timely implementation of legislative amendments,” he said.

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