The Ukrainian market for mortgage loans has been continuing to decline from the beginning of 2010. Since then national banks portfolios have reduced by 3.5 percent to 3.6 billions grivnas. In the first quote of this year, credits volume, guaranteed by real estates reduced to 3.64 billion grivnas, the national Ukrainian Mortgage Association (UMA) reported yesterday. Throughout last year credit volume reduced by 3.8 percent.
“During the pre-crisis years real estate markets were overheated due to very trite reason like greediness”, UMA chairman of board Igor Yushko said to Kommersant-Ukraine daily.
The Association also registers the volume of problem debts enlargement from 0.7 percentage point to 5.8 percent amounting to 7.22 billion grivnas.
Bankers suppose that the noticeable worsening of debts is related not only to customers incomes diminishing, but also to excessive “dolarization” (US dollars debts take up 77 percent of the portfolio), and the fall in real estate prices. Last year real estate in Kiev has become cheaper by 10.7 percent in average.
The head of the Ukraine BNP Paribas representative office Dominic Menu remarked that it is possible to avoid this difficult situation if the Central Bank limited foreign currency crediting.
“It had to be limited even in 2007”, he confided, “This is absolutely wrong when banks receive overseas funding for 2 to 5 years while credits were been given for 30 years”.
Escalating quantity of the market members and decreasing the average of grivna credits interest rates form 26 to 24.5 percent were not able to prevent the market decline. Bank conditions are still unaffordable for the majority of potential customers. So, the Association estimates further declining of mortgage volume.
“We have to hold prices for at list half a year to ensure customers that real estate will not continue to fall in price”, said Yushko.
“The growth renewal might be possible if banks will allows to work with long term credits in grivnas, which is hard to expect in the near future”, Troyka Dialog senior analyst Evgeny Grebenuk said.
“Central bank have to switch on a printing press and fill the economy with grivnas”, Minister of Economy adviser Sergey Yaremenko said.
“When inflation rate will drop lower than 10 percent, we’ll start to talk about mortgage market renewal”, Forum Bank official Kshishtov Kuzhbik concluded.