Banks resume cooperation with retail chains to offer buyers the so-called interest-free installments, and the Cabinet of Ministers is preparing a program of cheap mortgage loans at 0-7% per annum. The bankers told about it during round table “The return of retail lending: features of wartime”, organized by the “Financial Club”.
“We are currently negotiating with a large chain to launch zero installment loans. In June, the level of sales in the networks was about 50% of the pre-war level. Clients have a request for loans at a zero rate. A small number of players returned to the market. Therefore, objectively, there is a request for cooperation with banks in this direction,” said Alexander Mrishuk, Director of the Department of Retail Targeted Lending at Credit Dnepr Bank.
Negotiations with retail chains are currently ongoing.
“We have several projects on the bank’s balance sheet that are actively involved in this area. Now cooperation with Eldorado, Sportlife is being resumed. These projects are run by sportbank and CreditMarket, which are engaged in consumer lending. There are plans to upgrade with other market players. Banks are ready, but a lot depends on the partner,” says Artur Muravitsky, Deputy Chairman of the Board of TASkombank.
At the same time, the periods when customers want to be allowed not to pay interest for using installments may be reduced.
“Of the available proposals, this is 3-6 months. Some participants planning to enter the market are considering offering installments up to 10 months. Now there is a revival in this direction,” said Alexander Mrishuk.
Moreover, as noted during the round table, the government is preparing to launch the program “Ukrainian Dream”which will allow Ukrainians to buy housing on credit at 0-7% per annum.
“This new program from Ukrfinjitl provides an opportunity to get a loan from 0% to 7%. And the rate is fixed for the entire duration of the 20-year loan,” said Vladimir Chernenkiy, Director of Retail Business Development at Pravex Bank.
The program will focus on different groups.
“There are certain categories there: military personnel, police, another power bloc, the social sphere – doctors, teachers, scientists. The rate is at the level of 3%. Other categories of clients, including internally displaced persons who have lost their homes, clients who do not have their own housing or have less than the standard area, can receive a loan at 7%,” Vladimir Chernenky explained.
He believes that the program should focus on the development of the primary market of the least developed housing. In 2021, there were 340,000 real estate purchase and sale transactions, but only 12,000 of them were financed by mortgage loans. Of these loans, the primary market accounts for only 17%.
“This program will make it possible to attract the widest range of banks, even small ones that do not have a cheap resource for lending, since financing will take place at the expense of Ukrfinjitl. There will be three models of cooperation. The state has shared economic and military risks and will take the risk of losing housing due to hostilities,” says Artur Muravitsky, Deputy Chairman of the Board of TASkombank.
Unlike current concessional lending programs, the budgetary institution will not compensate for the interest rate, but will provide the funds themselves for lending.
“Banks are immediately given a 20-year resource for lending to clients who receive a fixed rate for the entire period. We are no longer talking about compensation and its expectations from the state. Ukrfinzhitlo provides banks with financing, and banks use it to provide loans to buy housing in the primary or secondary market,” Volodymyr Chernenky said.
Alexander Mrishuk, Director of the Department of Retail Targeted Lending at Credit Dnepr Bank, believes that the role of the state in the mortgage market will increase.
“In the future, the role of the state will only increase, as we see a war risk, a high NBU discount rate, which does not allow banks to make mortgages available without state support,” he is sure.
His bank is offering additional benefits to internally displaced homeless people.
“At the end of spring, we submitted our proposal for the state to provide a guarantee so that customers who have lost their homes can use a loan to purchase a home without a down payment,” Mryshuk said.
However, bankers do not undertake to predict the price dynamics yet.
“We don’t know how real estate prices will behave in the future. This is also one of the issues in the launch of mortgage lending. Because we, as a bank, do not fully understand how to correctly evaluate this collateral object. There are old assessment methods, but today they must change significantly. Because it is necessary to take into account other risks for a particular facility and for a particular city,” Vladimir Chernenky emphasized.