Mortgages in Ukraine in 2020: what are the conditions and how much loan rates will be reduced
Mortgages in Ukraine froze in anticipation of a reboot
Mortgages in Ukraine in 2020 should give impetus to the primary real estate market. Strengthening of the hryvnia, rising construction costs and high mortgage rates have reduced sales and margins to developers. All market players expect from the NBU and banks when an affordable mortgage starts operating in 2020.
The portal “Capital Real Estate” 100realty.ua estimated how realistic it is to reduce mortgage rates in Ukraine in 2020.
The market is waiting for lower rates
At the end of 2019 – the first days of 2020, positive signals were received from the leadership of the National Bank of Ukraine.If their intentions come true, mortgage lending will revive the market for new buildings in Kiev and throughout the country.
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“2020 should be a year of full restoration of mortgage lending. Today, the hryvnia price of resources in banks is 8-9%, that is, we can already talk about a mortgage of 14-15%. And this is our task for the year, because it will give impetus to the further development of the economy, ”said Yekaterina Rozhkova, first deputy head of the NBU.
Later, the head of the National Bank, Yakov Smoly, predicted a reduction in the discount rate, which would inevitably lead to cheaper bank loans: “We have all the prerequisites to lower the discount rate at a faster pace. An 8% discount rate should be expected in the next (2020th – ed.) Year, ”he said in an interview.
Now the discount rate in Ukraine is lowered to a two-year low: 13.5% is the lowest figure since the end of 2017.
Olga Solovey, founder of URE CLUB, is sure that a set of measures is needed to make the mortgage affordable and work. “First of all, this is a decrease in requirements for the reservation of funds by banks. And here, in order to avoid the risks of non-repayment of funds and the emergence of problem loans, it is necessary to protect the rights of the creditor at the legislative level. That is, you cannot be the owner of the apartment until you fully pay the mortgage. Of course, a stable political situation is also an essential condition. What we have today inspires confidence that with a systematic approach next year it is possible to actually reduce interest rates on mortgages and get closer to European standards, ”she said in a comment to Property Times.
Mortgage Rates at the Beginning of 2020
Mortgage in Ukraine in 2020
Despite the optimism of the NBU leadership, at the beginning of 2020, mortgage rates remained high, especially given the strengthening of the hryvnia in the 4th quarter of the previous year. The most affordable mortgage in 2020 (as of January) is 17-18%. Such a mortgage rate is possible only if a number of conditions are met by the borrower, and is also available only to certain categories of citizens (see the section “Banking requirements for mortgages” below).
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On average, real mortgage rates in Ukraine range from 18% (financing by state banks of individual construction projects) to 25% (micro-mortgage, when the borrower does not have a small amount to buy in the amount of 10-15% of the total cost of real estate).
Mortgages in Ukraine are so expensive that mortgage rates are often equal to rates on micro-loans for small businesses and private entrepreneurs. Large network banks offer FOPs credit programs, including the purchase of real estate, at a real rate of 21% in the range of 500 thousand – 1 million hryvnia.
Hidden Mortgage Payments
Almost all mortgage programs in Ukraine contain hidden mortgage payments:
life and health insurance of the borrower for the entire loan program (0.5-1% of the loan amount);
insurance of purchased property, annually for the duration of the entire loan program;
one-time commission when issuing a loan (0.7-1% of the amount);
at the expense of the borrower, real estate is evaluated, and only by appraisers, which the bank has chosen.
Mortgage Bank Requirements
It is difficult to obtain a mortgage in Ukraine and the stringent requirements of banks to the borrower. First of all, it is necessary to confirm the presence of high official incomes. When obtaining a mortgage loan in the range of 500 thousand – 1 million UAH for a period of 5-7 years, you must have an official income of at least 20-25 thousand UAH per month. The incomes of other family members, especially the spouse, should also be high.
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At the end of 2019, after the dollar depreciated, several banks offered updated mortgage programs at reduced rates – from 16.9% to 19%. However, special requirements were put forward to borrowers.
Bank specific requirements for mortgages
Mortgage loan only for FOPs with special activities (