Development of sustainable housing market

(Financed by KfW Banking Group)

The objective of the loan program is

- increasing the volumes of mortgage loans in AMD,

- extending the repayment periods for mortgage loans,

- applying flexibility of loan rates,

- introduction of risk management mechanisms in the process of loan granting and servicing,

- expansion of loan supply for residential houses outside of Yerevan,

- granting of loans to households with relatively modest income 

- introduction of minimum quality standards for the mortgage loans to the Armenian market,

which will serve as a basis for the development of the secondary market.

On March 23, 2006, KfW and the Central Bank of Armenia concluded an agreement providing for the disbursement of EUR 6.0 million in loan to the Central Bank of Armenia by KfW. In December 2007 an agreement was concluded on increasing the volumes of funding and provision of new funding within the framework of the effective contract (phase II). According to this agreement, KfW allotted the Central Bank of Armenia another EUR 6.0 million within the framework of the "Development of sustainable housing market" loan program to refinance the qualified mortgage loans granted by Partner Financial Institutions (PFI), thus increasing the size of the loan program up to EUR 12 million.

Based on the success of the first two phases of the Program the Governments of Armenia and Germany have enacted to continue the program by initiating the third phase. On April 19, 2010 a new loan agreement was concluded between the RA Central Bank and KfW, on granting a loan of EUR 20 million within the framework of the German-Armenian Fund "Development of sustainable housing market" loan program. The objective of Phase III is to specifically promote mortgage lending in rural areas.

In March 31, 2016 the Loan Agreements amounting to EUR 20 million have been signed between the Central Bank and KfW for the 4th phase of the ″Development of Sustainable housing market″ Program. The Program is directed to the increase of energy efficiency of the real estate in Yerevan, as well as to the development of the mortgage market in regions.

All phases of the program were accompanied by technical support component, which was also financed by KfW. Unlike the previous three phases of housing finance program, within the framework of the fourth phase three types of loans exist, i.e. traditional, rural and mortgage loans for energy efficient housing. 

All the lending within the Program is currntly carried out through cooperation with the "National Mortgage Company" RCO.