AUB News

A meeting of the Mortgage Lending Development Committee of the Association of Ukrainian Banks was held in Kyiv on April 23, 2025. The main topic of the meeting was the discussion of the launch of a pilot mortgage product based on a compensation model.

The Committee was attended by 31 representatives of the banking sector, Ukrfinzhytlo and other relevant institutions. The World Bank suggested that Ukraine develop a model for compensating part of the interest rate on mortgage loans as a tool that would provide a quick effect and facilitate access to housing for the general population.

"Compensation model": what the participants discussed
The main focus of the discussion was on creating a new mortgage product that would complement the current "e-Housing" program and allow for scaling and quick results by directing banks' own liquidity to finance the issuance of loans.

The participants discussed:

• The indicative rate: the majority agreed on 7-10%.
  
• The duration of the compensation period: options of 5 or 10 years were also voiced, depending on the target group of borrowers.
  
• Compensation mechanisms and bank risks: the banks emphasized that the compensation should be stable and not depend on the annual approval of the state budget.

IDPs: Special Conditions and Challenges
The participants also discussed the issue of mortgage accessibility for internally displaced persons. The participants agreed that for this category it is necessary to provide for a reduction in the down payment to 10%. At the same time, the need for additional guarantee or insurance mechanisms to reduce banking risks was emphasized.

Bank expectations: profitability and protection of rights
During the meeting, the position of banks on the desired level of profitability within the framework of the compensation model was voiced. In the part of 14–20%, banks see the minimum accepted rate for themselves, taking into account the cost of resources and risks.

Particular attention was paid to the issue of protecting the rights of creditors. Participants expressed the opinion that the current state of the legislation does not ensure effective debt collection. The idea of ​​creating an interdepartmental initiative that could propose a set of changes - from registered to judicial procedures was voiced.

Military risks and insurance
The issue of military risks, which to a large extent support banks from active mortgage lending, was also discussed. The participants of the meeting emphasized that they are waiting for the implementation of the initiative of the Ministry of Economy to create a State Insurance Agency, which can cover cases of loss or destruction of housing as a result of hostilities. The participants noted that without such a mechanism it will be difficult to calculate the long-term activity of banks.

 

The institutional role of Ukrfinzhytlo
Representatives of Ukrfinzhytlo reported that they are ready to fulfill the role of an operator of mortgage programs: to provide funding to banks, and in the future - to buy out mortgage portfolios with the subsequent formation of an MBS product. Such a mechanism, as noted, works in many countries where state or semi-state institutions ensure long-term stability of the mortgage market through loan securitization.

Next steps

• Summing up the meeting, the Committee participants agreed:
  
• to continue the technical development of the compensation product;
  
• to coordinate key parameters with the World Bank, which is ready for partnership;
  
• to form a working group to prepare regulatory changes to protect the rights of creditors;
  
• to consider creating a single contract template that will facilitate the work of banks.

Who joined the discussion
The meeting was attended by representatives of Ukrfinzhytlo, Oschadbank, Privatbank, Kredobank, Ukrgasbank, Taskombank, Globus Bank, Sky Bank, Investment and Savings Bank, Sense Bank, Kominbank, Alliance Bank, Trust-Capital Bank, Radabank, Universal Bank, Pravex Bank, OTP Bank, Crystal Bank, Europrombank.

The Committee meeting demonstrated a high level of involvement of the banking community in the restoration of housing lending in Ukraine. The new compensation product can be a good addition to the e-Housing program in the mortgage sector - provided that the state, banks and international partners effectively interact.
The AUB Committee will continue to coordinate efforts to make mortgages accessible, safe and long-term for Ukrainians even under martial law.

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