Developments in the mortgage market are a positive socio-economic stimulus for the state. The dynamics of the mortgage market in the Republic of Armenia has been changing since 2014, driven by implementation of the program of income tax return. In the year 2022, there was a notable increase in income tax sums directed at mortgage interest repayments, as well as in the number of beneficiaries.
During the same year, 29.199 beneficiaries involved in the program received 36.5 billion drams of income tax, while back in 2021 the number of beneficiaries accounted for 20.920, with over 22.7 billion drams of returned income tax. Between 2015 and 2022, 31.890 citizens benefited from the income tax return from mortgage interest repayments, amounting to 89.1 billion drams.
An increase in the activity of the mortgage market has recently been noted by Central Bank Governor Martin Galstyan. ‘The Central Bank has been conducting a loan restraint policy. An increase in interest rates by the CB leads to an increase in other types of interest rate, including mortgage loans. At the same time, a surge in mortgage interest rates has been milder, even than that of CB refunding.’
In an interview given in October, 2018, Saribek Sukiasyan, the chairman of the Council of HayEconomBank OJSC, touched on the measures taken by the government in order to boost construction industry and mortgage market. ‘The steps taken by the government have significantly enlivened the mortgage market. Our bank is also taking deliberate action aimed to boost this direction. The bank funds construction companies on special terms and operates within all state loan programs. ’
Discussing programs aimed to boost the industry in the interview, Sukiasyan noted: ‘HayEconomBank, National Loan Company CJSC and Sil Insurance PCJSC introduced a joint program, which enabled customers applying for a mortgage loan to only pay 10% down payment instead of 30%. Instead of the remaining 20%, a customer insures the down payment with Sil Insurance, with no need for additional pledge.’
Sukiasyan emphasizes bank-customer relationships. ‘Clients should be more literate and better aware in order to be able to interpret and understand clauses found in bank agreements and not to get tempted by seemingly appealing offers full of underwater stones.’
Sukiasyan expressed his concerns which are still relevant. ‘Clients are frequently lured by low-interest loans, being unaware of additional charges and commissions they will later have to pay. Certain banks provide clients with misleading information through ads, which makes the latter draw inaccurate conclusions. Expressions like ‘best bank’, ‘first bank’ and others might lead a customer astray.’
‘Analysis of various bank indicators is of great importance as well, which enables accurate assessment of the actual position of the bank, regardless of ads and promotions. Banks in turn should help clients with decision making in the management of their own finances, avoiding marketing ploys and unconscientious competition,’- noted Sukiasyan.
According to Saribek Sukiasyan, having operated since 1991, HayEconomBank, as a pioneer bank of the newly-formed republic, has never been pushy and aggressive in the competitive environment ever since. ‘The ideology of the end justifying the means has never been part of our vision. We are in favor of constructive competition and I find the obsession with making profit by means of violating the market rules and corruption simply unacceptable.’
Sukiasyan also noted that these days, when the role of banks in the socio-economic life of the country is essential, there are certain rules that should never been broken. ‘I do not believe that customer involvement through damping, transactions for suspicious and business-wise notorious clients, at times even loaning to next to bankrupt clients, are a decent way of long-term development and steady growth for a bank. ’
‘Banks have their internal mechanisms of control, groups in charge of that control. Over the years, we have attributed much importance to the application of those mechanisms and have designed the development plan for the coming years on the basis of risk assessment. Growth commensurate with risks rather
than expectations of profit here and now- this is the key to success, ’- noted Saribek Sukiasyan.