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NBU Presents Findings of Bank Surveys on Mortgage Lending Volumes

The National Bank of Ukraine (NBU) has started publishing the findings of monthly bank surveys on the volume of retail mortgage lending. The information will be published on a monthly basis on the NBU’s official website. 

The survey findings represent the banks’ self-assessment of their own mortgage portfolios, and, therefore, may not correlate with the official statistics available on the NBU’s official website in the Statistics section.  The reason for such differences primarily lies in the data, including the data from the management reporting, which the banks used for the purpose of compiling this table. This approach better reflects the type of collateral for loans, and, hence, the content of the loan classification. 

The monthly data within the survey contain the following information:

  • total mortgage debt and the number of mortgage agreements
  • volumes and number of new mortgage loans in the primary and secondary real estate markets
  • average effective interest rates for the reporting period
  • granting new mortgage loans with a breakdown into regions.

Below are some of the conclusions drawn from the published data:

The volume of mortgage lending increased due to the higher average loan size in 2020

Despite a decrease in new mortgage loans in April-May 2020 due to the introduced quarantine measures, mortgage lending resumed in July and remains high. In September, the number of new loans grew by a third compared to September last year.

Bank survey results show that the total volume of new mortgage loans increased by 16% to UAH 2.3 billion yoy over the first nine months of 2020. However, only 3,640 new mortgage agreements have been concluded since the beginning of 2020, which is 269 less than in the same period last year. At the same time, the average size of a mortgage loan has increased from about UAH 490,000 at the beginning of 2019 to UAH 700,000 in September 2020.   This is currently an average size of a loan for house purchase in both primary and secondary markets.

Banks mainly lend to the purchase of real estate in the secondary market

According to the survey findings, the secondary market significantly dominates both in number and volume of lending. In 2020, mortgage agreements concluded for house purchase in the secondary market represent almost 87% of the volume and number of all new mortgage agreements. In contrast, in 2019, the secondary market loans accounted for 83% of all the agreements in terms of their total value and 85% in terms of number. 

Rates for house purchase in the secondary market are lower

In 2020, the weighted average effective interest rate on new secondary market mortgages has been lower than in the primary market. According to the data provided by banks, in September 2020, the average mortgage rate amounted to 14.9% in the secondary market and 18.2% – in the primary market.

At the same time, in September 2020, about 40% of mortgages, both in number and value, were concluded with a fixed interest rate (in contrast to 75% of all mortgage agreements in early 2019).

Note that the effective interest rate includes the nominal rate, as well as all related costs of the borrower in favor of the bank, and is calculated for the entire term of the loan.

Most mortgage loans were issued in Kyiv

Over the first nine months of 2020, the largest number of loans were issued in Kyiv, making 953 agreements for a total amount of UAH 835 million (26% of the total number of agreements and 37% of the total value of agreements).

The second largest number of mortgage agreements (390) were concluded in Kharkiv oblast accounting for 11% of all agreements for the total amount of almost UAH 176 million (7.7% of all agreements). Kyiv oblast saw the third biggest number of mortgage agreements concluded, specifically 369 agreements for UAH 317.7 million (10 % and 14%, respectively). Then goes Dnipropetrovsk oblast with its 263 agreements for UAH 124 million and Lviv oblast with 252 agreements for UAH 166.7 million.

 

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