OTP Bank provided the first loan in Ukraine under the state program “Affordable Mortgage 7%”
OTP Bank provided the first loan in Ukraine under the state program “Affordable Mortgage 7%”, the agreement on which was signed on Monday, March 1, on the platform of the All-Ukrainian Forum “Ukraine 30” in the presence of Amdriy Gapon, Chairman of the Entrepreneurship Development Fund, Yuri Draganchuk, Deputy Minister of Finance and Volodymyr Mudry, Chairman of the Board of OTP Bank.
The first borrower in Ukraine under this program was M. Maksymyuk, a current client of OTP Bank from Kyiv, who received a mortgage loan to buy his own home in the suburbs of Kyiv.
The young family – M. Maksymyuk and his wife, Natalia, were congratulated on receiving a mortgage loan by the President of Ukraine Volodymyr Zelensky, the Minister of Finance of Ukraine Serhiy Marchenko and the Chairman of the Board of OTP Bank.
As V. Mudryi said during the signing ceremony, “this program provides an opportunity to restore affordable mortgage lending, which the citizens of Ukraine needed now“. “We studied the experience of developed countries and concluded that the development of the mortgage market is possible if the interest rate on such loans does not exceed 10% p.a. And today, thanks to the partnership with the State, we have the opportunity to launch this development with a new force.” Also, according to him, the experience of other countries shows that mortgage and consumer portfolios are correlated as 1:1 in the developed market. While in Ukraine, this ratio equals 1:15. “So, in the coming years we can expect a 15-fold increase in the mortgage market, provided that Ukraine maintains macroeconomic stability,” the banker said.
According to O. Klymenko, a member of the Board of OTP Bank, responsible for the development of retail business, the bank plans to actively develop the mortgage direction. “We have long and successful experience in the field of cash loans, car loans, including used, and for the purchase of equipment by individuals, many of whom are the target segment of the program “Affordable Mortgage 7%”. “We know these clients well, we are familiar with the structure of their income and expenses, financial behavior, and clearly understand the potential risks of working with them, which we consider moderate and manageable. Moreover, based on our experience, the actual life of a mortgage loan does not exceed 5-7 years, despite the terms of the agreements in 15-20 years,” the banker emphasized. “If these people were not ready or could not afford to overpay for housing significant funds at market interest rates before, today 7% per annum is a perfectly reasonable price for them to purchase new housing on credit. By the way, at this level, 7% per annum, albeit in foreign currency, interest rates on housing loans were in 2007-2008 during the boom in mortgage lending in Ukraine,” he added.
The goal of the Affordable Mortgage 7% program is to provide housing for people in need of better housing conditions. It can be used by citizens of Ukraine who need housing, via partial compensation of interest on mortgage loans. According to its terms, the interest rate for the borrower will be 7% per annum, the loan term – up to 20 years, own contribution – from 15% of the mortgage value, the maximum loan amount is not more than 2 million UAH.
OTP Bank received the status of an authorized bank under this program on February 26, 2006 after signing the relevant agreement with the Entrepreneurship Development Fund.
The new program “Affordable Mortgage” is implemented through the Fund for Entrepreneurship Development by amending government decrees of January 24, 2020, N 28 and N 29, according to which the state program “Affordable Loans” 5-7-9% “is implemented and funded.
Public Joint Stock Company OTP Bank is one of the biggest Ukrainian banks with foreign capital, a recognized leader of the financial sector of Ukraine. The bank entered the Ukrainian market in 1998. Since then, it enjoys a staunch reputation of the socially responsible, reliable and robust institution that provides its consumers with European quality services. The Bank offers a full range of financial services to corporate customers, private individuals, small and medium enterprises. The largest Hungarian OTP Bank Plc owns 100% of the bank capital.
Since 2019, OTP Bank entered the list of systematically significant Ukrainian banks that wield a substantial influence on the financial sector development.
In Ukraine, OTP Bank JSC keeps a financial group which includes OTP Capital Asset Management Company and OTP Leasing LLC.