World Bank2017-05-312017-05-312012-06https://hdl.handle.net/10986/26815As the Mongolian mortgage market grows rapidly, and the Government of Mongolia (GoM) pursues an ambitious social housing agenda, there is an urgent need for a holistic sector approach. The following three key areas require attention from policymakers: first, there is a need to better balance housing supply and demand, which requires the authorities to focus on prudent mortgage lending standards and supervision, as well as on provision of housing infrastructure and zoned land. Second, it will be important to ensure effective implementation of ongoing and planned public housing finance programs, with a focus on preventing mortgage market distortions in pricing, emphasizing robust planning and rigorous transparency and governance. Third, authorities should aim for better balance in the composition of mortgage funding, with a focus on improvement in the legal and regulatory framework for capital markets, as well as Mongolian Mortgage Corporation (MIK) governance, products and operations. The Mongolian mortgage market is exhibiting strong growth, with portfolio outstanding increasing by 190 percent to Mongolian Tughrik (MNT) 656 billion (US$482 million) between 2009 and end-2011. This represents 8 percent of 2010 gross domestic product (GDP) and 12 percent of the 2011 banking loan book. The sector is highly concentrated, with top 4 lenders accounting for 89 percent of the market, as well as spatially in and around Ulaanbaatar. Housing prices have risen sharply in the last two years, particularly in 2011, when the increase for the predominantly mortgaged market segment was over 36 percent. While mortgage lending growth rates are consistent with the overall growth of household credit, real estate prices significantly outpaced Consumer Price Index (CPI) and GDP growth in 2011. Currently non-performing loans (NPL) are very low due to the unseasoned mortgage portfolio; however, high debt-to-income (DTI) ratio levels may exacerbate future loan age-related and cyclical delinquency increases. Due in part to extreme climatic constraints, shortage of zoned and serviced land, and infrastructure bottlenecks, housing supply is severely constrained. Large-scale, publicly-funded, subsidized housing initiatives, such as the '100,000 Apartments' Program, need to be carefully planned, so that they cause minimal distortion to the broader housing finance market.en-USCC BY 3.0 IGOACCOUNTINGASSET-LIABILITY MANAGEMENTAUCTIONBALANCE SHEETBALANCE SHEETSBANK CREDITBANK LENDINGBANK REGULATIONSBANKING CRISISBANKING REGULATIONBANKING SECTORBANKING SYSTEMBENEFICIARIESBONDBOND INSTRUMENTSBONDSBORROWERBORROWER FINANCINGBROKERAGECADASTRECAPACITY CONSTRAINTSCAPITAL ADEQUACYCAPITAL ALLOCATIONCAPITAL BASECAPITAL FLOWSCAPITAL FUNDCAPITAL GAINSCAPITAL MARKETCAPITAL MARKETSCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCAPITALIZATIONCASH FLOWSCENTRAL BANKCENTRAL BANKSCENTRAL SECURITIES DEPOSITORYCOLLATERALCOMMERCIAL BANKCOMMERCIAL BANK LOANSCOMMERCIAL BANKSCOMMERCIAL MORTGAGECONSUMER CREDITCONSUMER PROTECTIONCORPORATE DEBTCORPORATE GOVERNANCECREDIT AVAILABILITYCREDIT CARDSCREDIT COOPERATIVECREDIT ENHANCEMENTSCREDIT GROWTHCREDIT GUARANTEESCREDIT INFORMATIONCREDIT INFORMATION BUREAUCREDIT RATINGCREDIT RATIONINGCREDIT RISKDEBENTURESDEBTDEBT FINANCINGDEBT INSTRUMENTSDEBT ISSUESDEBT OUTSTANDINGDEBT SERVICEDEFAULT COSTSDEPOSIT INSURANCEDEVELOPMENT BANKDOMESTIC CAPITALDOMESTIC CAPITAL MARKETDURATION MATCHINGEQUITY CAPITALEQUITY STAKEEXCHANGE RATEEXPENDITUREEXPENDITURESFINANCIAL CRISISFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL STABILITYFINANCIAL SYSTEMFORECLOSUREFOREIGN CAPITALFOREIGN CURRENCYFOREIGN INVESTMENTFUTURE LOANGLOBAL FINANCIAL STABILITYGOVERNMENT SECURITIESGROSS DOMESTIC PRODUCTGROUP LOANHOLDINGHOUSING FINANCEIMMOVABLE PROPERTYIMPLICIT SUBSIDIESINDEBTEDNESSINFLATIONINFORMATION TECHNOLOGYINITIAL PUBLIC OFFERINGINSTITUTIONAL CAPACITYINSTITUTIONAL INVESTORSINSTRUMENTINTEREST RATEINTEREST RATESINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCIAL INSTITUTIONSINVESTMENT FUNDINVESTMENT PURPOSESINVESTMENT VEHICLESINVESTOR BASEINVESTOR CONFIDENCEIPOISSUANCELEGAL FRAMEWORKLEGISLATIVE FRAMEWORKLENDERLENDERSLEVEL PLAYING FIELDLIABILITYLIABILITY BASELIENLIQUIDITYLIQUIDITY RATIOSLIQUIDITY RISKLLCLOAN AMOUNTLOAN AMOUNTSLOAN CLASSIFICATIONLOAN GUARANTEELOAN PORTFOLIOLOAN PRODUCTSLOAN REPAYMENTSLOAN TERMLOCAL CURRENCYLONG-TERM LIABILITIESMARKET ACCESSMARKET DATAMARKET DEVELOPMENTMARKET DISTORTIONMARKET DISTORTIONSMARKET INSTRUMENTSMARKET INTEREST RATESMARKET INTERMEDIARIESMARKET INTERMEDIARYMARKET LIQUIDITYMARKET PARTICIPANTMARKET PARTICIPANTSMARKET PRICESMARKET SIZEMARKET VALUEMATURITIESMATURITYMICRO LOANSMICROFINANCEMONETARY FUNDMORAL SUASIONMORTGAGEMORTGAGE BONDSMORTGAGE FINANCEMORTGAGE INTERESTMORTGAGE LOANMORTGAGE LOANSMORTGAGE MARKETMORTGAGE MARKETSMORTGAGE-BACKED SECURITIESMORTGAGESNON-PERFORMING LOANSNONPERFORMING LOANSNPLOPEN MARKETOUTSTANDING AMOUNTSOUTSTANDING LOANPARTIAL CREDITPAYMENT OF PRINCIPALPLEDGESPOLICY RESPONSESPORTFOLIOPORTFOLIO ALLOCATIONPORTFOLIO OF MORTGAGEPORTFOLIO PERFORMANCEPORTFOLIOSPREPAYMENTSPRICE DISCOVERYPRIVATE BANKSPRIVATE CAPITALPRIVATE EQUITYPRIVATE LENDERSPROBABILITY OF DEFAULTPROPERTY RIGHTSPROVISION OF CREDITPRUDENTIAL REGULATIONPRUDENTIAL SUPERVISIONRATES OF RETURNREAL ESTATE INVESTMENTREAL PROPERTYREGISTRY SYSTEMSREGULATORY AUTHORITIESREGULATORY FRAMEWORKREMITTANCESREPOREPOSRESERVERESERVE REQUIREMENTRESERVE REQUIREMENTSRESIDENTIAL MORTGAGERISK MANAGEMENTRISK PROFILESECURITIESSECURITIES MARKETSECURITIES MARKET LAWSHARE OF INVESTMENTSHAREHOLDERSHAREHOLDERSSOVEREIGN BONDSSOVEREIGN GUARANTEESOVEREIGN GUARANTEESSTAMP DUTYSTOCK EXCHANGESWAPTAXTAX EXEMPTIONTAX TREATMENTTERM DEPOSITTERM DEPOSITSTRADE DATETRADINGTRANSACTIONTRANSPARENCYUNSECURED DEBTVALUATIONReportWorld Bank10.1596/26815