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Mortgage market policy in Mongolia
Is the third entry in a blogseries about debts and credits. At the beginning of December 2015 it was announced in the newspaper headslines that business lending institutions would stop offering house purchase credits at a low interest of 8%. 8% interest-bearing residential mortgage" (8 hauviin ordon suutsny zeel ) is a nationwide program launched and executed by the federal authorities through business banking institutions.
One of my boyfriends, B, intended to buy a bigger apartment from another boyfriend by offering his apartment to his boyfriend. Bs planned to buy an apartment and was about to obtain a mortgage authorized by the ban. Since he was very sure to get a loan from the banks, and since the sale and purchase agreements took place between buddies, they agreed to swap flats before getting all the formalities done.
When B left, he went to his friend's apartment while his boyfriend, who had granted the mortgage, went to his former apartment. Only a few working days later, they all got the message that the bank would no longer offer a mortgage with 8% interest rates. They all panicked and looked for help from a boyfriend working in the financial sector to find out whether the suspension was a transitory or lasting political one.
You asked two of your buddies, one in the Khan Banka and another in the State Banka (Toriin Bank), and both reassured on the basis of information from the inside that the suspension would not take long. It is widely believed that mortgage lending allows those living in rural areas to buy housing with low-interest loan facilities, thereby reducing atmospheric contamination throughout the town.
No other large institution competes with banking in Mongolia's entire finance system. Consequently, the suspension of the 8% mortgage programme could further lead to a breakdown of the "financial system" (sankhuugiin togtoltsoo) as individuals could not buy housing at higher interest rates. It was not only him, but also many other experts working in local banking establishments who were very sure that the suspension would not take long for the good of the sustainable functioning of the monetary system.
Since I am not an authority on monetary and monetary affairs, I am not in a good condition to give a detailed opinion here. However, this abolition gives the perception that business lenders benefit from mortgage credit and are sheltered by the current system of finance and high levels of societal demands for shelter. One of the two main reasons the Constitutional Tribunal came up with was the cantonal government's bankruptcy law, and it became a catalyst for the Union of Bankers to choose to overturn the 8% mortgage program.
The civilians D. Yanjinkhorloo and B. Enkhbayar have complained against some provisions of the Act on Mortgage Contracts between Banks and Non-Banks (NBFS). Therefore, the constituent session of the tribunal proclaimed that the right of the mortgage infringes fundamental freedoms, as stated in the constitution. They also asked other questions as to why the mortgage act had to be changed.
According to the tribunal, banking and mortgage lending and mortgage lending by NGOs and NGOs infringed Article of the Act against Fair Use. Seventeen corporate banking institutions and NBFSs predominate the credit and mortgage service sector in Mongolia, accounting for more than one-third of the mortgage markets. As an example, business lenders benefit from interest income from mortgage lending.
That refers to the gains that bankers make when ordinary folks suffer, and is one of the reasons why he says that all bankers should be referred to as "pawnbrokers" (Lombarde). 1 ] It is indeed remarkable that many Moorish and non-Mongol businessmen, among them also some political leaders, bankers or NBFS have opened in Mongolia.
Some of the owner of this bench were unveiled in a 2010 newscast, but many are not known. Khan further disclosed that a very large domestic corporation, the Tavan Bogd Group, and other overseas corporations, such as Savada Holdings of Japan, own Khan Banka (the latter owning the majority with 53%).
A further 2014 paper relates to banking proprietors as profiteers (mongo huulegchi). It shows that Global Investment and Development holds the biggest stake in the Trade and Development Banks at 65%. There is speculation in the paper that ex-president N. Enkhbayar and deputy J. Battulga, who own Jenko, also own stakes in the state.
They are the three biggest banking institutions in Mongolia. When I was doing research in Dundgovi goalag, Batbayar, a young man who worked in Turkey, was telling me about Islam bank lending without interest. We can see that mortgage lending is heavily politicized and not just economically or socially, especially when Mongolia is only a few month away from the next general election in June.
"The mortgage issue becomes an asset to sovereigns near the election." In addition to changes to the Mortgage Act, the Democratic Party government leadership has reduced mortgage rates from 8% to 5%. The Mongolian parliament passed an amended mortgage law (Ul hodlokh ed horongiin barsitsaany kukhai khuuli) on 19 January 2016, about a months after the end of the 8% mortgage loan.
Article 1 now allows the owner to grant the creditor authorisation when the creditor changes property. The interest rates have also fallen from 8 to 5 percent, leading to a possible threat to the overall economic situation in the near-term. Mongolia, for example, had to increase its printing of local currencies in order to grant mortgages, which led to an increase in the rate of 13% and housing prices rose sharply.
Perhaps there are many more economists who see the 5% interest rate mortgage as a serious menace to the already fragile economies. The conclusion of this Directive does not address the possible damage that could be caused to the economies. Mongolia's only agents who benefit rigorously and are securely shielded from social, political and economic risks are the merchant bankers held by overseas investment companies and Mongolian theologians.
Indeed, they are certainly sheltered, first by the need for living space, secondly by policy choices that respond to government requirements to get more voters for the upcoming elections, and finally by the inexorable finance system that has been monopolised and dominating with credit. What still is to be asked is: What was the policy behind the changes in mortgage rates?
Is it the result of the ruling of the Constitutional Tribunal on the infringement of fundamental humanitarian law and monopolization in the domestic market? Isn' the 5% interest mortgage another short-term policy game to get pre-election backing? 2 ] Rebecca Empson and D. Bumochir's contact with Ganbaatar Jambal, January 2016.