NBU criticizes bill on mortgage borrowers

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According to the regulator, banks would be reluctant to reinstate mortgage lending as a result of the adoption of the law.

NBU criticized the bill on mortgage borrowers. Photo: arcprivatelending.com

National Bank of Ukraine criticized the new Bill no. 3640, Which was transferred to Verkhovna Rada on 15 July.

The document proposes a moratorium on expulsion of sole home borrowers who have pledged to provide loans in foreign currency. Without the adoption of this bill, the deferment introduced in 2014 will end in October 2020.

Bill’s creator was deputy to the party “servant of the people” Alexander Dubinsky.

On the official page Facebook NBU representatives published the following message:

“Have you dreamed about a cheap mortgage this year?” We also. But you can’t stop dreaming.

Today, the Parliamentary Committee on Finance, Tax and Customs Policy supported the bill of Alexander Dubinsky number 3640.

This is a burning case when the name is good – “about the protection of mortgage borrowers”, and the essence is rotten. The result would be the reluctance of banks to reinstate mortgage lending.

explain why

The deputy proposed a moratorium on the recovery of assets on foreign currency loans. The moratorium was introduced indefinitely in 2014. And there were objective reasons for this. The country started a war and an economic crisis. Due to the depreciation of the hryvnia, citizens could not continue to make payments on the foreign currency mortgage. Therefore, banks were prohibited from collecting collateral: apartments and houses.

However, during the six years of the moratorium, some foreign currency borrowers did not start servicing loans. If there is no profit then why pay?!? The banks took all the brunt, and accordingly, to their depositors and holders. Eventually, banks were forced to create additional reserves. Of course, this negatively affected banks’ willingness to lend to buy housing.

In 2019, the issue was resolved. In October, a new bankruptcy code was launched. The Code provided a de facto mechanism for the reorganization of loans of mortgage borrowers. A position acceptable to both banks and citizens was offered. At the same time, the restructuring mechanism itself will function fully, if the restriction is lifted.

But instead of lifting the postponement, we are now being offered to extend it till 2022. This means that the distressed debt of foreign currency borrowers will not be settled. And it is 44 billion contracts which is 29 billion dollars in total.

what does this mean?

This means that banks will not be interested in issuing new mortgages. In their appeal today, banking and business organizations indicated that increasing the moratorium would make it impossible for the population to launch affordable mortgages of 10% per year.

We regularly ask banks: “Why don’t you offer a mortgage?” Do you know what they answer to us? The main answer is to stop the recovery of assets on foreign currency loans.

So, dear citizens and customers of banks. If this law is still adopted, do not be surprised that banks refuse to issue you a mortgage loan. “

The National Bank called on lawmakers not to adopt a “harmful bill” that could “deprive citizens of the dream of an affordable mortgage.”

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Earlier, Olga Lobaychuk, head of the Department of Consumer Protection of the National Bank of Ukraine, explained why Ukrainians should be very careful with loans from financial companies “at 0%”.

Read:
Mortgages in Ukraine: What You Need to Know When Applying for a Loan for an Apartment
Smartphone Wallet: Top 5 Myths About Paying with a Mobile Account

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