The Cabinet of Ministers, the Ministry of Finance, the National Bank and profile committees of Ukraine are working on the launch of mechanisms for mortgage lending to the population with a fixed rate of 7% and financial leasing at 5%, Deputy Head of the President’s Office Kyrylo Tymoshenko said.
“A few weeks ago, the Cabinet of Ministers decided to launch a mortgage at 7%, now we are working together with the Ministry of Finance and the National Bank to reach an affordable and clear mortgage with a fixed rate […] There should be clear conditions – with a down payment of 20% for a period of 20 up to 30 years,” Tymoshenko said during the all-Ukrainian forum “Ukraine 30. Infrastructure” on Monday, February 22.
He said that several times, a mortgage with a non-fixed rate had been launched in Ukraine, which caused distrust of the population.
“A separate program is financial leasing, which is carried out by the Ministry of Finance with profile committees, at 5%. First of all, for doctors, military, police, socially unprotected segments of the population, and we also hope that we will be able to implement this for internally displaced persons,” Tymoshenko said.
The deputy head of the President’s Office said that financial leasing for internally displaced persons could start in the near future.
“We have found a mechanism for how to implement this. We hope that in the first half of the year, as the president set the task, this mechanism will be launched,” the deputy head of the President’s Office said.
President of Ukraine Volodymyr Zelensky has reported on the fulfillment of his election promise: this year Ukrainians will be able to get an affordable mortgage for housing at 7%.
“We promised to do everything in the program to make young Ukrainian families have a headache from just one question: what to choose – an apartment in the city or a country house,” the head of state recalled in a video message posted on his Facebook page on Friday morning. He noted that an important step has been taken this week on the way to this – the mortgage available for Ukrainians was launched at 7% per annum.
He noted that an important step has been taken this week on the way to this – the mortgage available for Ukrainians was launched at 7% per annum.
“I think this is a great victory. When someone tells you that in his time the indicators in the country were higher, he is not lying in this sense. Because two years ago the average mortgage rate in Ukraine was 21%. Now it will be seven. And already this year, Ukrainians – and, by the way, this applies not only to young families, but also to all our citizens – and so, this year they will be able to get an affordable mortgage for housing at 7%,” Zelensky said.
Banks providing housing mortgage loans expect that during the year average monthly mortgage volumes would grow by 10%, according to a poll of the National Bank of Ukraine (NBU) published in the fifth financial stability report. “Banks-respondents expect further growth in volumes of housing mortgage loans. Thirteen banks [out of 24 polled] predicted that in next 12 months average volumes of mortgage loans would grow by over 10%. Five more banks expected growth less than 10%. Six banks projected the unchanged volumes of new loans,” the NBU said in the report.
At the same time, the NBU said that the existing volumes of mortgages cannot affect the residential real estate market. The volume of lending in the first quarter of 2018 increased 3.9-fold and amounted to UAH 565 million. However, issuing less than 3,000 loans a year cannot affect the market: only in Kyiv on the secondary housing market annually more than 30,000 purchase and sale contracts are signed.
According to the poll, in 2017 and in the first quarter of 2018, the purchase of housing in the secondary market was dominated by the number of contracts and the volume of lending. At the same time, the volumes and number of loans issued under the partnership programs of banks with developers are gradually increasing.
According to banks, the main obstacle to the resumption of housing mortgages is the deficit of solvent borrowers with officially confirmed incomes. Thus, in the first quarter of 2018, the average debt service-to-income (DSTI) was 45%, which is 3 percentage points less than a year earlier. At the same time, 18% of the volume of loans granted is accounted for by borrowers who will spend more than 70% of their income on debt servicing. The NBU said that the circle of mortgage creditors remains limited.
