2011. 06. 27
Ulaanbaatar, Mongolia
HOUSING FINANCE MARKET IN MONGOLIA
Ts.EnkhbayarCEO, MIK
WORKSHOP ON HOUSING
FINANCE
Content
• Housing condition• Housing finance market• Achievements and Challenges• Future steps
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Housing Condition
Ger House,apartment
Other
UrbanTotal 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%)
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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;
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Housing finance system development overview
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Housing Finance Market
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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%
Mortgage market overview
Market growth Market demand
Issues to be done for developing efficient mortgage market development
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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
Shareholders
Established 06.09.2006
Мongolian Mortgage Corporation (MIK)
• 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
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МIK acheivements:
МIK COOPERATION
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Projects:•KFW-Promotion of Mortgage Financing Mongolia project •IFC-Localization of Mortgage lending toolkit•IFC-Micro Housing Finance Project
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• 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
– 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
– 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
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What we are looking for…?
THANK YOU
Mongolian Mortgage Corporation LLC /MIK/
MIK Building , United Nations street-38Chingeltei district-4, 15160Ulaabaatar, Mongolia
www.mik.mn, [email protected] Tel: (976) 11-328267Fax (976) 11-313338