A loan program designed to help young couples get affordable housing is met with skepticism among those who fear that interest rates are too high, and that it will lead to graft on part of administrators of the loans.

On January 30, the Government of Armenia approved a program providing loans at 8-10 percent loans for new housing. The World Bank has allotted $8 million for the program, but it is believed that the appropriated funds will cover only about 300 families, whereas several thousand in fact would need such support to acquire housing.

Economist Mihran Simonyan says competition for the low-interest rates will be high, raising the risk of corruption.

“Kickbacks will increase, which is a widespread means of getting loans in Armenia,” Simonyan told ArmeniaNow, adding that the terms of underwriting loans cause concerns.

According to standards, all those couples can participate in the program whose total age does not exceed 65.

The price of an apartment to be bought in Yerevan should not exceed 16 million drams ($42,000), and in provinces – 10 million drams ($26,000), and the needed initial deposit is 30 percent. This means that a young family must initially have at least $12,000, and at least 300,000 drams ($789) monthly income. Almost all banks offer housing loans, but with a demand of 20-50 percent initial deposit, and an annual interest rate of 12-18 percent, with a repayment of 10-15 years.

“So it turns out that this program does not essentially differ from what trade banks suggest. It means that the State allots, let’s say, 25,000 drams per month, and it is affordable to all those who, in fact, do not need it,” says Mkrtich Karakhanyan, father of two children, a renter. “I hoped that at least there would be no initial deposit, because the hardest part for such families is the initial deposit.”

Edgar Helhelyan, head of the New National Conservative Movement, a group of activists pushing for civil society development, is sure that the program is rather a PR campaign.

“The reason is the suggested conditions, mainly the five million drams ($12,000) initial deposit, and only a few families can afford paying such a sum in Armenia.”