ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of August 24, 2017 No. 534

About approval of the Procedure of payments of the coefficients applied to benchmark interest rate on the public mortgage loan

For the purpose of implementation of article 10 of the Law of the Kyrgyz Republic "About the state mortgage housing lending", according to articles 10 and 17 of the constitutional Law of the Kyrgyz Republic "About the Government of the Kyrgyz Republic" the Government of the Kyrgyz Republic decides:

1. Approve the Procedure of payments of the coefficients applied to benchmark interest rate on the public mortgage loan according to appendix.

2. This resolution becomes effective after ten days from the date of official publication.

Appendix

Approved by the Order of the Government of the Kyrgyz Republic of August 24, 2017, No. 534

Procedure of payments of the coefficients applied to benchmark interest rate on the public mortgage loan

Chapter 1. General provisions

1. This Procedure of payments of the coefficients applied to benchmark interest rate on the public mortgage loan (further - the Procedure), regulates the general methodological principles of forming and calculation of the coefficients applied by authorized body in the sphere of mortgage housing lending.

Chapter 2. Basic concepts

2. In this Procedure the following concepts are applied:

- investment portfolio - set of remaining balance of mortgage loan debt, issued by banks from means of authorized body in the sphere of mortgage housing lending for certain date;

- settlement period - the period equal to term during which settlement transactions (no more than 12 months) are performed;

- the cost of the attracted resources - the price of the financial resources attracted by authorized body in the sphere of mortgage housing lending (further - authorized body) for issue and refinancing of mortgage loans. For example, the budget advance in the amount of 5 billion som is allowed by the Ministry of Finance of the Kyrgyz Republic under 3 annual interest rates, thus during fixed term the authorized body returns the designated amount and in addition to it pays the added percent.

Chapter 3. Calculation of interest rate

3. The interest rate for the public mortgage loan is estimated on the following formula:

Loan interest rate = B * To,

where:

B - benchmark interest rate which is determined according to the Law of the Kyrgyz Republic "About the state mortgage housing lending" (in % per annum);

To - the raising or decreasing coefficient.

3-1. The size of final interest rate for the public mortgage loan issued from financial resources of investors is established in accordance with the terms of the signed agreement, taking into account market conditions, the principles of responsible financing and the best practices in housing financing.

Chapter 4. Calculation of coefficient

4. The coefficient is calculated by the following formula:

TO = K1 + K2

5. The coefficient of K1 is calculated by the following formula:

K1 = (WITH + M + P + D-P) / B,

where:

With - the cost of the attracted resources of authorized body which is established by authorized body within the established agreements with partners, the international donor organizations, and also relevant decisions of the Government of the Kyrgyz Republic within program implementation of the Government of the Kyrgyz Republic "Affordable housing of 2015-2020" approved by the order of the Government of the Kyrgyz Republic of August 5, 2015 No. 560 (further - the Program) (in % per annum);

M - the margin of partner bank of authorized body which is determined by authorized body within contractual relations and does not exceed 5% (in % per annum);

Р - level of operating expenses of authorized body for settlement period, taking into account expenses on issue and placement of mortgage securities (in % per annum) which is established by authorized body proceeding from the following formula:

Р = planned costs of settlement year / average investment portfolio of authorized body for settlement period;

Д - average planned level of profitability of investment portfolio of authorized body for settlement period, taking into account the forecast rate of inflation which is established by authorized body by financing sources (in % per annum);

П - the state financial support in the form of subsidizing of interest rate (in % per annum).

6. Taking into account the differentiated approach depending on the size of the initial contribution on the public mortgage loan issued for acquisition of ready housing in the Preferential Mortgage direction the following values of coefficient K2 are used:

0,0 - in case of payment of the initial contribution on the public mortgage loan from 30%;

0,1 - in case of payment of the initial contribution on the public mortgage loan from 20% to 30%;

0,2 - in case of payment of the initial contribution on the public mortgage loan from 10% to 20%.

7. On the public mortgage loan issued for construction of the individual apartment house in the Preferential Mortgage direction in case of payment of the initial contribution on mortgage loan from 20% the following values of coefficient K2 are used:

0,4 - in the period of construction of the individual apartment house, established for the purpose of prevention and decrease in level of the risks connected with construction of the individual apartment house, and covering of possible expenses in case of construction in progress;

0,0 - during the period after the termination of construction of the individual apartment house established for the purpose of stimulation of construction and increase in housing stock of the Kyrgyz Republic.

7-1. On the public mortgage loan issued in the Available Mortgage direction in case of payment of the initial contribution on the public mortgage loan from 20% the following values of coefficient K2 are used:

0,4 - in the period of construction of the individual apartment house;

0,1 - during the period after the termination of construction of the individual apartment house and for acquisition of ready housing.

8. Ceased to be valid according to the Order of the Government of the Kyrgyz Republic of 25.02.2019 No. 93

Chapter 5. Example of calculation of interest rate

9. When calculating coefficient of K1 for mortgage loans the following indicators are considered:

- the cost of the attracted resources - 2% per annum;

- margin of partner bank - 3% per annum;

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