Georgian Banks Revamp Mortgage Loans Amid Market Demand

Strategic Insights -

Georgian banks are responding to market demands by renovating mortgage loan terms, aiming to provide more competitive products to clients. HSBC Bank Georgia and Bank of Georgia, two of the leading banks in the country, are revamping their mortgage loan offerings. HSBC is set to re-launch its mortgage product within the next three months, while Bank of Georgia has decreased interest rates on hypothec credits and increased limits. TBC Bank has also simplified the process of giving out loans and lowered interest rates on several types of loans. These changes are expected to increase demand for mortgage loans and make them more accessible to consumers.

Key Takeaways:

  • HSBC Bank Georgia plans to re-launch its mortgage product within the next three months, with a minimum loan amount of USD 100,000 and interest rates ranging from 14% to 17%.
  • Bank of Georgia has decreased interest rates on hypothec credits from 18% to 16% and increased limits from USD 50,000 to USD 150,000.
  • TBC Bank has simplified the process of giving out loans and lowered interest rates on mortgage loans, auto loans, and consumer loans.
  • The monthly limit on hypothec credits at Bank of Georgia will be USD 4.5 million and is unlikely to increase in the future.
  • Bank of Georgia issued exactly 4,634 mortgage loans in 2008, with an average interest rate of 18%.
  • The total number of all types of loans in 2008 was GEL 1.9 billion, while the total number of issued loans by June 2009 was GEL 1.6 billion.
  • TBC Bank aims to offer the lowest interest rates in Georgia, taking into account the improvement of the economic environment.
  • The percentage of bad-payers at Bank of Georgia presently is only 4% of the total credit portfolio, down sharply from 7% previously.

Statistics:

  • HSBC Bank Georgia's Mortgage loan portfolio by June 2009 was about USD 13.5 million.
  • The maximum amount of a mortgage loan was USD 200,000, with a maximum term of 240 months and interest rates varying from 14% to 17%.
  • Bank of Georgia issued 4,634 mortgage loans in 2008, with an average interest rate of 18%.
  • The total number of all types of loans in 2008 was GEL 1.9 billion.
  • The total number of issued loans by June 2009 was GEL 1.6 billion.
  • Bank of Georgia gave out GEL 22 million worth of mortgage loans during the first part of 2009.

Sources:

  • The FINANCIAL (HSBC Bank Georgia's Marketing, Communications and Corporate Sustainability Manager, Maka Gvritishvili)
  • Bank of Georgia (CEO, Irakli Gilauri, Corporate Communications and PR manager, Sophio Balavadze)
  • TBC Bank (bank officials)