President of Ukraine

President: There are examples when Ukrainians take mortgage loans at 10%

11 August 2020 - 18:16

Ukrainian citizens should be able to buy housing on credit at affordable interest rates – at least 10% per annum, as bank mortgage rates, which have existed so far, are simply unaffordable for many Ukrainian families, President Volodymyr Zelenskyy has said.

According to the Head of State, one of the main tasks of the current government team is that mortgage loans in Ukraine were issued at 10% per annum and at smaller percentage.

"We have fought for a year. The government, the Office of the President, the National Bank, and other banks worked to do this. Now, there are agreements, and they are already being implemented. Now the mortgage rate is reduced. In some banks the mortgage is 10%. In general, the main task was: if the mortgage rate is 10%, we will really help people who can afford to buy a home," Volodymyr Zelenskyy said.

He said that in the past, before he was elected the President, he took a mortgage to buy a home in Obolon district in Kyiv at "terrible interest rates" – 22-25%. According to him, high interest rates on housing loans create a significant burden on the family budget, because almost all earnings have to be given to the bank. Therefore, they must be reduced to a reasonable level.

"There are problems, I know. They are related to the key policy rate of the National Bank and inflation. But all these difficulties are technical. All of them will be mitigated over time. Now the most important thing is that there is already a signal and examples: people can and do take a mortgage loan at 10%," the Head of State said, adding that this is only the beginning.

According to Deputy Head of the Office of the President Yulia Kovaliv, in the first month of the program to provide affordable mortgages to the population, the total amount of loans was UAH 75 million (more than 200 mortgage loans). And by the end of the year, the mortgage portfolio of banks may reach at least UAH 3 billion.

The President announced the project on affordable mortgage lending as a priority at the beginning of the year, and now these are only the first steps. Both state and commercial banks are involved in the program. Most of them launched a pilot project on July 1.

In the current environment, affordable mortgages for banks are becoming a completely commercial product in which they are interested. Demand and the number of applications for it are growing.

Each bank has developed its own program and conditions for providing affordable mortgage loans, such as the overall amount, the amount of the down payment, the term for offering the preferential rate. The only standard condition is that borrowers must demonstrate to the bank that their family or household has income, which will allow servicing this loan.

Work continues to strengthen the protection of creditors' rights, which reduce the risks of mortgage loans for banks and, consequently, reduce their value for borrowers.