Country Highlights Mongolia

NHB-APUHF

International conference 30/Jan/ 2012

Enkhbayar Tsedendorj

Content • Mongolian housing market growth –Mining town Housing development

• Mortgage market overview

• Potential development of Mortgage market

• Development of Secondary mortgage market and MIK’s function

• Conclusion

Housing Areas:

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Ger area

Source: Mongolian 2010 Census

• Population 2,75 million, Total # Households-714,000

• 45% of them in Ger including 33% urban households

• Urban- 67%; Rural 33%

• Ger and Housing, %

• Urban: 33:67; Rural: 71:29

Mongolian housing market growth

• Over the 20000 units under construction in UB alone

• The volume of housing units per year will have to be at least 10,000 to meet demand, including the mining towns

Source: MRTCUD

Housing supply, by thousand sq m

“TSETSII” Mining Town Housing development in South Gobi, TsogtTsetsii soum, by Energy Resources Company

Area: 21 hectare1648 flats for mining workers Social and physical infrastructure facilities will be provided

Source:ER, MCS property

Current Housing Development

Ulaanbaatar city

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Mongolian Ger

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The strong growth of banks begun in 2004 has resumed

Source: BOM and TDB

Mongolia’s strong GDP growth will drive strong loan growth

Source: IMF and TDB

Mortgage lending in Mongolia will grow dramatically

The sources are BoM, IMF, MIK TDB

Providing Home ownership to more and more Mongolians

Source: MIK and TDB

Mongolian mortgage market overview(1)

Market indicators 2005 2006 2007 2008 2009 2010 2011Mortgage market debt outstanding (billion MNT) 30,8 74,3 164,6 218,0 226,0 333,7 656,5

Mortgage market share of Systemic Loan market , % 2.3% 3.3% 8.0% 8.3% 8.6% 10.7% 11.64%

Total Debt Outstanding Per Borrowers (million MNT) 6.4 8.3

10.0 13.2 13.6 16.9 24.8

Numbers of Total Borrowers, thousand 4,7 9,0 16,4 16,5 16,6 19,7 26,5

Market I.R /Ann , %/ 14.7% 17.8% 16.0% 18.7% 17.7% 15.7% 16.9%

* Source: Monetary Policy and Research Department, Bank of Mongolia

NPL %Mortgage loans-0,45%MIK portfolio-0.0%

Mortgage Standard: •LTV <70%•DTI>45%

Mongolian mortgage market overview(2)

* Source: Monetary Policy and Research Department, Bank of Mongolia

Housing Price Index , by 6 districts of the Capital city

* Source: Bulletin of National Statistic office**Note: Statistical substitutional methodology has been used on some apartment price data.

MONGOLIAN MORTGAGE CORPORATION

Established 06.09.2006

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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

Mission statement• 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 smooth functioning of long-term financing system

• To promote affordable home ownership and urban development for Mongolia’s people.

• Purchased 10 Mortgage pools • MIK issued Covered Mortgage Bond in 2009

-9,7 Bln MNT, 2, 3.5, 5 years, 14-14.5% • Got an approval from the Financial Regulatory Commission to issue

25 bln MNT bond ;• Mortgage Legal and Regulatory framework

– Mortgage standardization and Documentation - IFC and KfW, EBRD – Mortgage law July 2009– Asset based security law April 2010– Shelf registration , OTC procedure

• Listed as a repo financing instrument under Central Bank of Mongolia

• Capital increase, offering equity investment to potential investors

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МIK OPERATION

Cooperation and recent development

• Cooperation with IFC, KfW, USAID, APUHF, EBRD

– IFC: 2 Small TA-Mortgage toolkit adaptation and Housing micro finance

– KfW: Loan and TA project through Government FSM

– USAID: Legal framework and Mortgage bond Guarantee 50%

–Wharton school International HFP, Hofinet data :

– CAGAMAS

Conclusion• Considerable housing needs to be built in Mongolia• Mongolian mortgage market is developing rapidly• Secondary market development will be essential • Foreign investors in covered bonds or mortgage backed

securities will be needed• MIK, with strong local and international support, is

poised to create quality investment instruments• Investors in the housing market, as well as the

secondary mortgage market are welcome

THANK YOU

Mongolian Mortgage Corporation LLC /MIK/

MIK Building , United Nations street-38Chingeltei district-4, 15160Ulaabaatar, Mongolia

www.mik.mn, info@mik.mn  Tel: (976) 11-328267Fax (976) 11-313338  25