The Consequence of Mortgage Abolition by Private Banks: An Examination of Price and Demand Dynamics in the Housing Market
In the heart of Central Asia, Kazakhstan's real estate market and mortgage industry are navigating a complex landscape shaped by recent policy decisions and economic conditions.
On June 16, 2025, the government introduced new caps on annual effective interest rates, setting a maximum of 35% for secured loans such as mortgages [1]. This regulatory change aims to make borrowing more affordable and prevent excessive interest burdens on borrowers. However, high base rates and tighter banking sector regulations have kept mortgage rates relatively elevated, constraining borrowing capacity for home buyers.
The National Bank of Kazakhstan raised its base rate to 16.5% in March 2025 due to factors like currency depreciation and rising inflation (consumer price index at 9.4% in February 2025) [2]. This move increases the cost of mortgage financing, which tends to dampen demand and slow market activity.
In response to overheating signs in the retail credit sector, the government introduced a 2% countercyclical capital buffer on banks' risk-weighted assets related to retail lending, taking effect from April 2026 with a transition period. This prudential measure aims to strengthen banks' resilience but may tighten credit availability in the short term [2].
Despite the interest rate caps, the mortgage market is currently operating under relatively high interest rates, with some banks temporarily stopping the acceptance of applications for mortgage loans. This situation has led to a decrease in the number of transactions and a drop in prices for two consecutive months [3].
Larisa Stepanenko, a prominent figure in the industry, has expressed concerns about the affordability of mortgages with a lower initial deposit, as it would increase the loan amount and monthly payments. She also noted that while a temporary mortgage freeze caused market shock, she does not believe mortgages will disappear [4].
Elena Griva, another industry expert, believes that a significant increase in the size of the initial deposit would have a negative impact on the real estate market. She also clarified that people are taking a more measured position regarding the real estate market, waiting for official regulations before taking action [5].
Approximately 35-40% of real estate in Kazakhstan is purchased using mortgage loans, and the cost per square meter is currently more or less approaching reality, with a difference between the listed price and the actual sale price being 10-15% [6].
In conclusion, Kazakhstan’s government and central bank have taken steps to moderate mortgage lending costs through rate caps but maintain a tight monetary stance due to inflationary and currency pressures. The mortgage market is currently operating under relatively high interest rates, and prudential banking measures may limit credit growth. This environment likely results in restrained mortgage borrowing and a cautious real estate market, with prices stable or growing more slowly rather than surging [1][2][5]. No confirmed information suggests a widespread mortgage postponement policy has been implemented recently.
[1] Kazakhstan Caps Mortgage Interest Rates to Tame Lending Costs, Reuters, June 16, 2025. [2] Kazakhstan Raises Interest Rates to Tackle Inflation, Bloomberg, March 1, 2025. [3] Kazakhstan's Real Estate Market Experiences a Slump, The Astana Times, August 15, 2025. [4] Larisa Stepanenko Questions Affordability of Mortgages with Lower Initial Deposits, Tengrinews, July 15, 2025. [5] Elena Griva on the Impact of Increasing Initial Deposits on the Real Estate Market, Kapital.kz, July 25, 2025. [6] Cost per Square Meter in Kazakhstan's Real Estate Market Approaches Reality, Kazinform, August 10, 2025.
- In response to the new caps on annual effective interest rates for mortgages in Kazakhstan, investors may need to rethink their strategies in the housing-market and real-estate sector, as high base rates and tighter banking sector regulations could keep finance costs relatively elevated.
- The high base rates, resulting from factors like currency depreciation and rising inflation, have increased the cost of mortgage financing in Kazakhstan, potentially affecting the availability of investing opportunities in the housing-market and real-estate sector.
