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20 11 . 0 6 . 27 Ulaanbaatar, Mongolia

WORKSHOP ON HOUSING FINANCE. HOUSING FINANCE MARKET IN MONGOLIA. 20 11 . 0 6 . 27 Ulaanbaatar, Mongolia. Ts.Enkhbayar CEO, MIK. Content. Housing condition Housing finance market Achievements and Challenges Future steps. Housing Condition.

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20 11 . 0 6 . 27 Ulaanbaatar, Mongolia

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  1. WORKSHOP ON HOUSING FINANCE HOUSING FINANCE MARKET IN MONGOLIA 2011. 06. 27 Ulaanbaatar, Mongolia Ts.Enkhbayar CEO, MIK

  2. Content • Housing condition • Housing finance market • Achievements and Challenges • Future steps

  3. Housing Condition Some Housing Statistics 2010 – result of Census POPULATION 2 754 685 HOUSEHOLD 713 780 Ger 322 836 (45.2%) House, apartment 382 808 (53.6%) Other 8 136 (1.1%)

  4. Ger Areas: Housing Areas: ● Ger – 322 836 (45.2%); ● Self built house – 209 931 (29.4%); ● Apartment – 152 338 (21.3%); ● Luxury detached house – 3 839 (0.5%); ● Workers flat & dormitory-10 334(1.5%); ● Other public dormitory – 6 356 (0.9%); 70%- Population; 59%- UB; 80-90% Provincial Towns; - Planning – not proper - Water supply – kiosks (potable) - Sewage – pit latrine - Heating – stove using coal and wood - Electricity – central system - Social infrastructure – not sufficient - Land ownership –yes - Housing finance – savings, assistance from relatives and friends, loans - Planning –proper , - Water supply – central system - Sewage – central system - Heating – central system - Electricity – central system - Social infrastructure –sufficient - Apartment ownership –yes - Housing finance – mortgage loans, savings

  5. Housing finance system development overview Housing Finance Market

  6. Mortgage market overview Market demand Market growth

  7. Issues to be done for developing efficient mortgage market development

  8. Мongolian Mortgage Corporation (MIK) Shareholders Established 06.09.2006 Main Goal Promotion and development of primary and secondary mortgage markets by raising medium to long term funds on domestic and foreign capital market through a series of capital market tools to create and ensure s smooth functioning of long-term financing system to promote affordable home ownership and urban development for Mongolia’s people. Why we established MIK - Increase the affordability of the housing loan - Stable structure for long term financing - Liquidity facility - Increase in housing mortgage market - Need for capital market development

  9. МIK acheivements: • Healthy and well structured Institutional set up; • Total mortgage pool of purchase, 10.3 bln MNT; (PWR, PWOR) • MIK issued covered bond, 6.3 bln MNT; • MIK Bond listed as a repo financing instrument under Bank of Mongolia; • Standardized and documented origination and servicing; • Developed 2 Toolkits: • Mortgage loan; Micro housing loans • The shelf registration • Mortgage law, Asset backed securities law has been approved • Capacity development KfW project

  10. МIK COOPERATION Projects: • KFW-Promotion of Mortgage Financing Mongolia project • IFC-Localization of Mortgage lending toolkit • IFC-Micro Housing Finance Project

  11. Achievements • Government policy and programs 40000, 4000, 100000 • Funding support for Housing and housing finance • Supply side driven by private sector is growing • Housing finance system was set up-provite sector • Mortgage loan became one of the best financial product • Primary Mortgage market is in place • Secondary mortgage market does start up • The shelf registration -FRC • Legal framework was set up • Mortgage law, Asset backed securities law • The first OTC market initiative has been commenced • Mortgage loan standardization and documentation • Capacity building on mortgage market development

  12. Challenges • Lack of long term funding • Low affordability rate • Capital market development- weak • Understanding of mortgage related business • Insufficient Mortgage infrastructure • Professional appraisal • Credit scoring • Mortgage insurance • Tax and accounting guidelines • IT infrastructure • MIK plays dual role: • driven force of mortgage market development; • Cope business development • Economic stability • There is no local institutional investors • Absence of clear PPP on housing finance

  13. What we are looking for…? • Clear Government affordable housing and housing finance strategy • Needs strong explicit and implicit support by State (funding, guarantee) • PPP on housing and housing finance market development • Deepening secondary mortgage market • Needs long term funding that could relief mortgage loans from banks and convert into securities • Encouraging funding and equity investments by international financial institutions (EBRD, IFC, USAID, KFW….) • Domestic institutional investor (SSFund/pension fund) • Strong cooperation among relevant institutions

  14. THANK YOU Mongolian Mortgage Corporation LLC /MIK/ MIK Building , United Nations street-38 Chingeltei district-4, 15160 Ulaabaatar, Mongolia www.mik.mn, info@mik.mn Tel: (976) 11-328267 Fax (976) 11-313338

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