Due to increasing liquidity and decreasing interest rates, lending from banks and financial institutions has surged, leading to an increase in property mortgages in Nepal in the last fiscal year.
As the economy is returning to normal, data from the Department of Land Management shows an increase in borrowers taking loans from banks and paying their installments regularly.
In the last fiscal year, 418,151 properties were mortgaged, and 322,042 properties were released. Similarly, in the previous fiscal year 2079/80, 369,000 properties were mortgaged, while only 260,119 properties were released.
In Nepal, banks and financial institutions typically require property as collateral for loans. According to data from Nepal Rastra Bank, up to 68% of total loans are secured against property.
To obtain a loan, one must go to the relevant land revenue office or bank and mortgage the property in the bank’s name. If one does not have property within their immediate family, it is less likely they will receive a loan, even with a good income.
Once the loan is fully repaid, the property can be released by going to the land revenue office or the bank. Mortgaged properties cannot be sold or transferred.
If the borrower fails to repay the loan on time, the bank can auction off the collateral to recover the loan.
Monthly Breakdown of Mortgages and Releases:
In the first month of the last fiscal year, 28,130 properties were mortgaged and 26,423 properties were released. In Jestha, 35,436 properties were mortgaged, and 24,014 were released. Ashoj saw 42,000 properties being mortgaged and 28,000 released.
These numbers dropped in Kartik as 18,500 properties were mortgaged, and 15,000 were released. Howver, in Mangsir, 29,500 properties were mortgaged, and 25,500 were released.
In Poush, 35,500 properties were mortgaged, and 26,000 were released. In Magh, 35,500 properties were mortgaged, and over 29,000 were released.
Similarly, in Falgun, 39,500 properties were mortgaged, and 29,500 properties were released. In Chaitra, around 40,000 properties were mortgaged, and 29,000 were released.
Baisakh saw 32,500 properties mortgaged, and 28,000 released. In Jestha, around 45,000 properties were mortgaged, and 34,000 were released. Similarly, in Asar, 36,500 properties were mortgaged, and around 27,000 properties were released.
Recently, banks and financial institutions have had ample liquidity. As liquidity sufficiency increased, loan interest rates have fallen to single digits. Banks are now competing to provide loans at single-digit interest rates.
Through the last fiscal year’s monetary policy, the government had been easing restrictions on loans for real estate and the stock market.
As the economy has started to stabilize, data from the Land Department shows an increase in investments through bank loans. The property mortgages in Nepal has increased considerably.
Continue reading: Factors Affecting the Price of Housing in Nepal
