Ulaanbaatar
Banks fulfilled mortgage payment deferral requests from 57,456 borrowers
Economy
Ulaanbaatar /MONTSAME/. With a view to alleviate financial hardship posed by COVID-19 pandemic on businesses and individuals, who have been falling behind their loan due, the government of Mongolia together with the Bank of Mongolia and commercial banks decided to make deferrals on consumer and mortgage loan repayment and their interests from April 2020 until October 2020 and then again from November 2020 to July 2021.
The Bank of Mongolia has reported that between April 2020 and December 25, 2020, commercial banks have received payment deferral requests from 58,328 borrowers with total amount of mortgage loans MNT 3.2 trillion. Out of them, the banks have allowed to postpone mortgage repayments of 57,456 borrowers or 99 percent of all requests.
Those who obtained loan payment deferral are not required to make regular payments on their loans, including principal and interests, until July 01, 2021. The central bank sees that the loan payment deferral measures have helped each borrowing household to save approximately MNT 7.7 million amid the ongoing nationwide heightened state of readiness and lockdown measures in Ulaanbaatar as a prevention of COVID-19 transmission.
Upon the decision to make deferrals on loan repayment and their interests, the Bank of Mongolia has made temporary changes to regulations followed by commercial banks on their asset classifications and requirements for their operations, allowing the banks not to change their borrowers’ credit ratings caused by failures on loan repayment.
Beginning from October 1, 2020, mortgage loan annual interest rate, which was previously set at 8 percent, has been lowered to 6 percent with the aim of better reaching the target groups, those leaving in the Ger district areas, and reduce loan burdens.
The Bank of Mongolia reported that commercial banks issued 8-percent mortgage loans totaling MNT 290 billion to around 4,000 borrowers in the first 9 months of this year, and 6-percent mortgage loans amounting to MNT 120 billion have been granted to 1,800 borrowers since October 2020.
