Mortgage lending and the impact of financial volatility on the economy of Kazakhstan

The article examines the development of the mortgage lending market in Kazakhstan and the impact of financial volatility factors on mortgage loans. The main objective of the study is to assess the influence of inflation, the policy interest rate, and the exchange rate on the volume of mortgage lending, as well as to identify directions for ensuring housing market stability. Official data from the National Bank of the Republic of Kazakhstan, the Bureau of National Statistics, and second-tier banks were used in the study. The study employed statistical, correlation, regression, vector autoregression (VAR), and cointegration methods of analysis. The econometric modeling results showed that increases in inflation and interest rates have a negative impact on mortgage lending volumes. It was found that a 1% increase in inflation reduces mortgage loan volumes by an average of 0.7–0.9%. In addition, exchange rate instability was proven to increase construction costs and contribute to rising housing prices. The study found that the Otbasy Bank housing savings system is a relatively stable model under conditions of financial volatility. Based on a deposit-based savings mechanism, this system helps maintain the stability of mortgage lending. Accordingly, practical recommendations were developed, including the introduction of an inflation-adjusted government premium system, differentiation of down payment requirements, and the development of a digital mortgage scoring system. The results show that financial volatility significantly affects the dynamics of mortgage lending. An increase in interest rates reduces demand for mortgage loans and slows activity in the housing market. Rising inflation decreases real household incomes and limits long-term borrowing capacity. Exchange rate fluctuations raise banks’ funding costs and increase credit risks. The cointegration analysis confirms the existence of a long-term equilibrium relationship between mortgage lending volumes and key macroeconomic indicators. Impulse response functions demonstrate that the effects of financial shocks persist for several quarters. Government support programs play an important role in stimulating the market; however, their effectiveness depends on macroeconomic stability and the quality of risk management in the banking sector. The study confirms the multiplicative effect of mortgage lending on economic growth. The findings of the study have practical significance for improving the mortgage lending market, increasing housing affordability, and shaping public policy aimed at reducing risks in the financial sector.

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