Last year, mortgage lending in Tajikistan rose 20 percent, according to the National Bank of Tajikistan (NBT).
In 2020, 102.9 million somonis were reportedly provided in mortgage loans, which was 17.2 million somonis more than in 2019.
As of January 1, 2021, Tajik lending agencies have provided a total of around 400 million somonis in mortgage loans, which is only little more than 3.6 percent of a total loan balance reported as of January 1, 2021 (11 billion somonis).
Currently, of 18 banks operating in Tajikistan, only six – Spitamen Bank, The First MicroFinaceBank of Tajikistan, Alif Bank, Banki Arvand, Banki Osiyo and Bank Eskhata – provide mortgage loans. Besides, Microloan Deposit-taking Organizations (MDO) Humo and Imon provide mortgage loans.
Tajik central bank explains the low volumes of mortgage lending by the lack of long-term and relatively cheap financial resources attracted by banks.
Weighted average interest rate on mortgage loans provide din the national currency, the somoni, is 22 percent, and weighted average interest rate on mortgage loan provided in the foreign currency is 9.93 percent.
Tajikistan adopted the law on mortgage in 2008. In late December 2019, Tajikistan’s lower house (Majlisi Namoyandagon) endorsed amendments proposed to the country’s law on mortgage. The amendments reportedly aim to enhance the legal foundation of mortgage of property. The amendments, in particular, provide for transferring ownership of mortgaged property to a creditor without trial. Simplification of the mortgage legislation reputedly promotes development of the mortgage lending in the country.
A mortgage loan or, simply, mortgage is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society.
In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called "securitization", which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.
