Tashkent, Uzbekistan (UzDaily.com) – On 24 February, an open meeting was held at the Ministry of Economy and Industry with representatives of construction organizations, entrepreneurs, and commercial banks to discuss the introduction of new mechanisms for improving mortgage lending based on market mechanisms.

In accordance with the Decree of the President of the Republic of Uzbekistan dated November 28, 2019 No. UP-5886 “On Additional Measures to Improve Mortgage Lending Mechanisms”, a new procedure is introduced for providing the population with housing at the expense of mortgage loans based on market principles (hereinafter referred to as the new procedure), in accordance with which:

There are no restrictions on the area and cost of purchased housing.

The population independently makes their choice in the primary market (new construction) of housing (regardless of its location and housing area).

Entrepreneurs independently prepare housing projects without customer intervention.

The construction of an apartment building is carried out by a business entity at the expense of its own funds, loans of commercial banks on market principles.

In order to determine the maximum size of a mortgage loan, the Ministry of Finance, together with the Ministry of Economy and Industry and the Ministry of Construction, annually determines the estimated cost of housing, taking into account the average market price of one square meter of an apartment in the corresponding region and the minimum floor space for two and three bedroom apartments.

Based on the estimated cost of housing determining the maximum size of a mortgage.

If the cost of the purchased apartment exceeds its estimated cost and the uncovered part of the mortgage loan, the remaining part of the cost is paid by the borrower at his own expense.

Mortgage Loans are provided at market rates.

In order to provide the mortgage market with long-term resources, the Ministry of Finance of the Republic of Uzbekistan places money in commercial banks on market conditions for a period of 15 years (the size of the resources is not limited).

In case of reduction of the Central Bank’s key rate, the interest rate on mortgage loans of commercial banks and funds allocated by the Ministry of Finance will be proportionally reduced, and if it is raised, it will remain unchanged.

Entrepreneurs are given the opportunity to sell apartments built in the primary market at their own expense (bank loans) through mortgage loans, and for these purposes long-term resources will be provided to banks.