Delay in Kazakh mortgage cap fails to address housing affordability - expertsA six-month delay in capping mortgage rates will not solve Kazakhstan's housing affordability problem, according to financial experts, who predict a market slowdown and a shift in demand.The National Bank and the Financial Markets Regulatory Agency postponed a planned reduction of the maximum effective mortgage rate from 25% to 20% last week after several banks halted loan issuances. The cap was initially proposed to ease a growing affordability crisis, but lenders rebelled, arguing it made lending unprofitable in an economy with inflation at 12.9% and a central bank base rate of 18%.Experts from the Kazakhstan Finance Association said the administrative cap is a "relic of a non-market approach" that distorts pricing. "To make mortgages genuinely cheaper, it is necessary to reduce inflation and stabilize expectations. Any attempt to force the market to lower rates ahead of macroeconomic prerequisites will only lead to reduced credit availability and a growth in shadow schemes," the Kazakhstan Finance Association said in a statement.Economist Arman Baiganov questioned the logic of the policy. "The base rate of 18% is in no way compatible with a target mortgage rate of 20%," Baiganov said. "With the current base rate, even 25% is an extreme rate for profitability. A mortgage at 20% cannot exist a priori with an 18% base rate."He predicted the market would stagnate under these conditions. "With the current rate, the mortgage market will be sluggish; stagnation will set in. 25% is crippling conditions for clients," Baiganov noted.The situation is further complicated by the dominance of the state-owned Otbasy Bank, which offers subsidized rates as low as 3.5% and holds a 51% share of the national mortgage portfolio. This leaves private banks struggling to compete while still turning a profit. The market is now expected to cool, with demand shifting toward secondary housing and state-subsidized programs, which have seen their funding doubled to 500 billion tenge.Regulators, seeking a long-term solution, are developing a new mortgage rate calculation method that will incorporate the Loan-to-Value (LTV) ratio. They are also considering opening the state housing savings system to private banks, a move experts say would boost competition but would take years to impact consumers. (ICE ALMATY)

Fonte notizia: INTERFAX