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XacBank is continuing to issue 8(+1) percent mortgages

Lately it has been reported in the press that XacBank has increased its down payment requirements from 30 percent to 50 percent for its 8(+1) percent mortgage loans. To confirm this information, the interview was held with G. Chimegsuren, Head of Consumer Finance Department.
 
Hello. I invited you for a meeting regarding the information reported in the media. Does XacBank issue 8(+1) percent mortgage loans? How is the progress on the loan disbursement? 
- Hello. XacBank has been actively participating in the “Program on the Development of Sustainable System of Mortgage Financing” implemented by the Government of Mongolia together with Mongolbank to provide mortgage loans through its network of branches and sub-offices. As of today, we have issued mortgage loans to 639 citizens who purchased their housing and transferred 1,397 existing mortgage loans into the program. The program loan portfolio is worth over MNT 70 billion. We have been one of the first banks that marketed the loans under this program.
 
What is the reason for the increase in the down payment? We’ve learned that it is now 50 percent. Is this change due to XacBank’s lack of experience?  
XacBank has always been a pioneer in the housing market. We introduced mortgage loans from our own funds in 2005 for the first time. Our bank has made many historic achievements, for example, the bank has not only been one of the founders of Mongolian Mortgage Corporation (MMC), which was established for the purpose of developing a secondary mortgage market, but also was one of the first banks to sell its mortgage loan portfolio to MMC in exchange for securities. 
 
XacBank holds 10 percent of the total housing finance market and is actively involved in the issuance of mortgage loans over the past 10 years. XacBank has actively participated in the program since the beginning and has worked hard to issue mortgage loans without any interruption.
 
Since the start of the program, loan applications have significantly increased over the past 2 months and on average the bank issues approximately MNT 1.0 billion of mortgage loans per day. This is 3 times more than before the program began. The program loan applications have drastically increased from what we expected, creating an artificial increase in housing prices which has caused a negative tendency of breaching one of the purposes of the program, to support the economy and promote savings. However, XacBank has paid a special attention to the quality of the loan portfolio, which is the main factor for maintaining uninterrupted program activities and for the purpose of review loans issued in a relatively short period of time, the bank has made a temporary adjustment on the percentage and size of down payments.
 
At this time, the required down payment for loans under the program is 30 percent, same as with other banks, and at the moment we are processing 200 loan applications at such conditions.
 
Does XacBank provide loans from its own funds in addition to the program loans? What are the specifics of XacBank’s products?  
Yes. People, who do not qualify for the program due to total area of their housing, can apply for our housing loans with a tenor of 20 years and require only a 25 percent down payment. They may apply at the nearest XacBank branch or sub-office. XacBank has always worked with the aim to introduce products and services that meet the customers’ needs and requirements. Our housing loans have many options to choose from. For example, our housing loan product, which was introduced into the market in 2011, was well received by our customers. This loan provides an opportunity for our customers to resolve several issues using one loan: purchase of housing, garage, renovation and even furnishings for the house or apartment. We also provide many housing products that meet our customers’ needs such as loans for upgrades to living space, 100 percent financing loans and loans for Mongolians living overseas.
 
Thank you for the detailed information on the bank’s mortgage loans. I wish you every success in your work.