BAKU, Azerbaijan, October 13. As of the end of
June 2026, the mortgage loan portfolio in Azerbaijan had grown by
6.6% compared to the same period last year. The bulk of this growth
came from loans issued using funds from the Mortgage and Credit
Guarantee Fund (MCGF).
This was stated in the “Financial Stability Report” published by
the Central Bank of Azerbaijan (CBA).
During the reporting period, the outstanding balance of mortgage
loans issued using MGGF funds increased by 266.5 million manat
($156.8 million), or 10.8%, compared to the same period last year.
The outstanding balance of mortgage loans issued using banks’ own
funds grew by 27.7 million manat ($16.3 million), or 1.4%.
Consequently, as of the end of June, 58% of the mortgage loan
portfolio consisted of loans issued using IKGF funds, while the
remaining 42% consisted of loans provided using the banks’ own
funds.
The average annual interest rate on new mortgage loans increased
by 0.3 percentage points, reaching 10.72%. The interest rate on
mortgage loans issued using banks’ own funds rose by 0.39
percentage points to 12.76%. Meanwhile, the rate on loans provided
using IKGF funds remained unchanged at 7.04%.
The report also notes that the growth rate of household
disposable income exceeded the growth rate of housing prices.
According to data from the State Statistics Committee, compared to
the same period last year, housing prices rose by 8.4%, while
household disposable income rose by 10.5%.
Thus, for the first time since the end of 2023, the annual
growth rate of household disposable income exceeded the growth rate
of housing prices.
According to CBA data, growth in household disposable income has
a positive impact on the stability of mortgage lending. The
affordability index reflects the ratio of monthly disposable income
per capita to the average monthly mortgage payment. A figure above
100% indicates that income is sufficient to cover the monthly
mortgage payment, while a figure below 100% indicates that the
payment exceeds disposable income.
The report emphasizes that the positive trend observed in
household disposable income over the past two years has created
conditions for the continuous growth of the affordability index and
its exceeding of the established 100% threshold.
In addition, changes were recorded in rental prices and the
payback period for real estate in the housing market. According to
information obtained from public sources, the median monthly rent
offered in the country as of the end of June was 917 manat
($539.6). This figure corresponds to a payback period of 23
years.
The capitalization period increased by 2.1 years compared to the
end of last year. The report attributes this change to rising
housing prices over the course of the year and a relative decline
in rental rates.
