No housing in sight for a century: mortgages have completely stopped in Ukraine due to the war
13% of the mortgages issued in Ukraine over two years are in areas that are now under Russian control and in which active hostilities are ongoing.
This is stated in the new NBU report on financial stability, published on the regulator’s website.
“Mortgage lending will be completely suspended for the time being. To restore it, it is worth using support programs,” the NBU notes.
According to the Kyiv School of Economics, by the end of May, 44 million square meters had been damaged since the start of the full-scale war. m of housing, which is equivalent to a loss of $39,4 billion.
“So, due to the destruction of housing and the deterioration of the solvency of the population, a significant portion of the mortgage portfolio may become non-performing. At greatest risk are loans issued in areas that are currently under occupation and in which active hostilities are ongoing. This is 13% of the total volume of mortgages issued over the previous two years,” the NBU noted.
Borrowers with problem loans, the collateral for which is destroyed or damaged, as noted by the National Bank, will need mechanisms for restructuring and compensation for losses to restore old or purchase new housing.
“Losses arising from the mortgage portfolio should not be borne only by banks. They must be taken into account when developing a mechanism for compensating damage to Ukraine,” the NBU notes.
The NBU adds that the recovery of the unsecured consumer lending segment will occur faster, but the pace will be very far from the pre-war level.
Market analysts note that since the start of the full-scale war, the real estate market in Ukraine has almost stopped.
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