From the very beginning of this project announced by the government people were sure that the benefits of this project would not be adequate to the noise made for it. However, the initiators of the project were insisting on the vice versa, but through the time they understood that something should be changed there too.
This project has the goal to make apartments available to young families through subsidizing some part of the mortgage credit interest rate. This means that if the families applying for mortgage credit correspond to the requirements, they can take can 2% less interest rate on their mortgage credits, and plus the government subsidizes other 2%. As a result, young families can take mortgage credit for 8-9% interest rate.
The government gives resources to banks for issuing credits to young families, i.e. the government refinances. For this project launched in the beginning of this year the government has provided 3 billion drams, a part of which was directed at refinancing 300 mortgage credits.
At that time many people used to say that 300 is a very small number. For example, the secretary of the National youth policy council Ruben Markosyan told journalists that according to their calculations the approximate number of the youth is 800,000 and 4-5% of them are not able to take mortgage credits because of the high interest rates. “This 5% are 40,000 people, thus today they are the beneficiaries and target group of this project now,” he said. Based on such information people thought there would be strong competition for this mortgage borrowing but only 300 out of the 40,000 young people had the opportunity to take part in the project. Every 133rd young man could enjoy this project. The time shows that there is no competition for this project and according to the head of the financial market development department of the ministry of finance Karen Tamazyan, 187 mortgage credits have been issued as of November 22. Other 33 application for mortgage credits are under consideration now.
We have written in our publications why this number of people taking mortgage credits is so low. The problem is that the state has limited the frames of the right for being called a youth as only the couples have to take part in this project whose ages taken together are not more than 60 and neither of them is over 35. As for the other conditions, these were not available not only for the youth but as well as elder and established personalities.
In order to take the credit young families should have not less than 400k drams monthly income. However, they say the parents of young families can support their children and guarantee their borrowing with their incomes too. Another problem is that the incomes should be registered but in Armenia most of employers register less income than the actual salary to pay less tax. Only budget employees can have registered incomes, whose salaries are not enough even to buy a 15 years old car.
The project was launched by the government’s 98-N decision on January 29, 2010, in which there is a very interesting idea: “Recent survey shows that about 46% of married young people are ready to buy apartments and take mortgage credits. Most of them don’t take the risk to take mortgage credits now as the interest rates and risks are high.”
There are many problems for the youth to be able to enjoy this project, that is why people believed that this was done mostly for the purpose of the government’s propaganda but not supporting the youth and the government assure that they understand everything and will do their best to ease the situation. The minister of youth and sports said that throughout the project implementation there were some difficulties and the government work to revise the project conditions but they cannot interfere in the market and tell the credit companies what to do.
On November 11 the government amended the mentioned decision and the official statement reads that this was done for the purpose of supporting the implementation efficiency of the project.
Yesterday Karen Tamazyan spoke about these changes and according to him the subsidy on part of the state will be raised from 2 to 4%, and the down payment sum will be reduced from 30 to 10%. However, this concerns the regions only.
The government first of all encourages the youth to buy apartments in the regions.
As for the youth in Yerevan, maybe this is more than they deserve. Anyway, they made more noise than real work because most of the youth who want to buy apartments are in Yerevan.