Mortgage credit rates will not change significantly by the end of 2010, according to bankers polled by Interfax-Ukraine.
"I don't expect a plunge in mortgage credit rates [by late 2010]… [as] two key factors hinder [the recovery of the mortgage crediting market]. First, this is due to the non-restructured portfolio of the banks involved in the process, and second, there is an absence of long-term funds in the national currency," said the board chairman of Subsidiary Bank Sberbank of Russia, Ihor Yushko,.
He said that it is better to give a chance to Ukrainian banks to issue credits in Russian rubles.
"I think that these risks [of mortgage crediting in rubles] would be acceptable for our bank: we have access to rather 'long' ruble resources in large volumes… I think that it would be acceptable for the borrowers as well, as rate in rubles are lower than in hryvnias, it would be at least 4-5% cheaper… for five-seven year credits," he said.
The first deputy board chairman of Ukrinbank, Svitlana Korchynska, predicts that the mortgage crediting market would recover no earlier than in five years.
"The mortgage crediting market will recover no earlier than in five years. Some short terms are unrealistic. Now no bank has long cheap resources. The mortgage credit rate should be 5-6%, but it's impossible to speak about this rate in Ukraine now. Banks cannot bear the requirements of the current classical mortgage credits in terms, for which credits are issued [it should be at least 25 years]," Korchynska said.
She said that a considerable risk for the banks is difficulties in selling property used as collateral.
"Banks accumulated property that they cannot sell due to the crisis, and mortgage risks on them are growing and they increase interest rates. In addition, during the setting of the mortgage credit value banks include risks of property value changes and possible hryvnia exchange rate fluctuations to the dollar, as the property market is linked to the dollar," she said.
The director of the retail business marketing department at VAB Bank, Anton Shaperenkov, said that in 2011 the banks would actively transfer to floating mortgage credit rates.
"Most of the banks issue credits using short-term resources, which are the deposits of individuals as a rule. Their term has grown now to seven months on average. Having these resources, the banks will have to peg to floating interest rates. Some Ukrainian banks in September cut mortgage credit rats to 17% per annum in hryvnias. Currently there are examples of cutting the rate to 15%. However, this did not impact the average market mortgage rate, which still exceeds 20% per annum. A mortgage credit rate of 17% per annum in hryvnais could be average market rate start from second or third quarters of 2011," he said.
Shaperenkov said that by late 2010 the banks would retain the mortgage credit portfolio registered as of early 2010.
The chairman of the supervisory board of Platinum Bank, Yuriy Blaschuk, forecasted that in 2011 the total mortgage portfolio of banks would fall.
He said that the clearing of banks' portfolios of bad mortgage assets would allow crediting to recover more quickly.
