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Mortgage borrower study: UAH 250,000 at 23% per annum, for 3-5 years

KreditMarket experts have studied a typical Kyiv mortgage borrower. It turned out that a borrower takes about UAH 200-250 thousand on credit for 3-5 years, with approximately UAH 12-15 thousand of repayment monthly out of his/her UAH 25-35 thousand monthly income.

Denys Rakovsky, Sales Director at KreditMarket, talks about a current situation on the mortgage market and expresses his opinion that the specified market segment features a pronounced “small mortgage” nature. Mr. Rakovsky evaluated an average mortgage amount in Kyiv to be approximately USD 30,000, which equals some 25-30 per cent of the cost of an average apartment at bedroom districts (USD 100,000). So, the mortgage turned from a real estate market driver to a tool for buying real estate and changing living conditions at the price bottom. “In Kyiv, a borrower entitled for taking a mortgage loan could search for an optimal housing option for a very long time as good apartments are bought out very quickly,” Mr. Rakovsky points out.

Mr. Rakovsky thinks that if talking about some “market average” picture of a borrower, an applicant for a mortgage loan is to prove that his official monthly income is over UAH 20 thousand. The specified amount allows a bank to consider this customer to be a financially reliable person, as 30 per cent of his/her official income makes up over UAH 6,000, which corresponds a monthly installment on a UAH ten-year mortgage loan at 22-24% per annum at appr. UAH 200-250 thousand.

A Ukrainian practice is that a specified customer has about 1.5 times as much income (over UAH 30 thousand), which allows the customer to repay about over UAH 12-15 thousand monthly. So, this customer can repay the whole loan for at least 3-5 yrs. In this case, the overpayment will make up about 36% of the loan taken, or up to 11% of the cost of real estate purchased.