DOI: https://doi.org/10.36719/2789-6919/44/61-64
Nail Gasimzadeh
Azerbaijan University of Architecture and Construction
PhD student
https://orcid.org/0009-0001-1311-4512
nail.qasimzade@gmail.com
The Role of Mortgage Loans in the Development of the Construction Sector in Azerbaijan
Abstract
The construction sector holds strategic importance in the economy of Azerbaijan and in recent years mortgage lending has become one of the key funding sources supporting its development. This article examines the role of mortgage loans in the development of the struction sector in Azerbaijancon. Following the establishment of a state-backed mortgage system in 2005, thousands of families have improved their housing conditions through long-term loans, which in turn stimulated growth in construction. Official statistics indicate that roughly 15% of residential property transactions in the country are financed via mortgages. From 2006 to 2024, nearly 52 thousand families obtained mortgages under the state Mortgage and Credit Guarantee Fund, improving their housing conditions. Mortgage lending has been concentrated predominantly in Baku (about 78% of all loans), significantly influencing the regional distribution of construction activity. Through government programs, subsidized interest rates, a mortgage guarantee mechanism and social housing projects have bolstered the financial sustainability of the construction sector. The findings demonstrate that mortgage credit expansion boosts demand and investment in construction, yielding positive effects on economic growth and employment. The article also reviews relevant state programs and expert opinions to discuss avenues for enhancing the mortgage mechanism in support of construction sector development.
Keywords: mortgage loans, construction sector, housing construction, state mortgage, economic development, government programs