SOUND LEGAL ENVIRONMENT, CONSISTENCY AND SYSTEMATIC APPROACH TO RULES AND STANDARDS – A KEY TO EFFECTIVE MORTGAGE MARKET STRUCTURE DEVELOPMENT

June 24, 2005.

    *** On 22 June 2005, a round table meeting entitled “Mor! tgage Lending: Ukrainian Realities and Development Prospects” hosted by the National Bank of Ukraine was organised by the EU-funded Establishment of Mortgage Market Rules and Legislation Project. The event’s main topic was promoting the role of Ukrainian National Mortgage Association (UNIA) as a think tank to develop a sound mortgage structure in Ukraine, as well as raising project public awareness among the public, market players, counterparts and the government. MPs and representatives from the country’s leading commercial banks and insurance companies, state institutions and international donor organisations shared their views and expectations on the current mortgage market.
    UNIA President, Igor Yushko, presented the current trends in mortgage lending development on the nationwide level, as well as of some results and possible expectations in the field. He emphasized how important it was for mortgage market players – from the government side as well as from the private sector to adopt clear and simple rules and build up a favourable and effective legal environment.
    As of 01 April 2005, the total volumes of disbursed housing mortgage loans amounted to 3.6 billion hryvnias and grew by 3.3 billion hryvnias since 2002, according to UNIA. Since the beginning of 2005 alone the disbursed housing mortgage loans grew by 24.8%. Overall, in the January 2002 – April 2005 period the growth rate for disbursed loans has been 4.8% per month. Despite some positive developments on the mark! et and s teady growth in disbursed loans in general, the actual share of housing mortgage loans in the commercial banks’ loan portfolios has been varying within 2.9-3.73% over the past year, reaching 3.7% as of 01 April 2005. Therefore, the share of housing mortgage loans remains rather scarce in the banks’ loan portfolios. The participants in the round-table meeting admitted that mortgage market key players felt “they were standing somehow still and willing to do considerably more”.
    Newly-elected UNIA CEO, Anton Sergeev, stated that the Association “was uniting some strongest financial sector players and aimed at creating effective mortgage market and act as a credible platform for dialogue between private sector, the government and international organisations”.
    While presenting the EU-funded “Establishment of Mortgage Market Rules and Legislation Project”, the project’s Team Leader Pierre-Yves Divisia underlined the need to build up an open and efficient mortgage structure in Ukraine with close analysis of the best practices gained in European and other countries. “Mortgage in Ukraine started only one decade ago, while in the Western part of Europe certain countries have an experience of more than 150 years. In other words, Ukraine is just in its early stage of mortgage development as Europe was in the 19th century. Consequently, foreign and Ukrainian experts should learn from one another and share experience to propose a structure as simple and safe as possible, avoiding sophisticated systems that efficiently work abroad but are not properly adapted to the local environment in Ukraine,” Divisia said.
    The project’s main tasks include developing institutional capacities of UNIA, enhancing its services to the commercial banks and upgrading its capacities to be one of the main contributors to the development of the Ukrainian mortgage concept; developing rules, regulations and mortgage standards for the Ukrainian mortgage system; organi! sing and implementing training programmes on mortgage related topics for bankers; executing public awareness actions and disseminating market information on the mortgage lending system.
    Mr Divisia also emphasized the importance of having a powerful and sustainable mortgage association to make the technical assistance provided within the current EU-funded project as productive and fruitful as possible, making a major contribution to an efficient and reliable Ukrainian mortgage system.
    Many participants pointed out the importance of mortgage for the country’s overall economic development and insisted on the importance of pursuing international co-operation to extend credit durations and lower interest rates – the co-operation that is meant to make a difference in Ukraine.
    The project is implemented by a consortium of consultancy and law firms headed by TECNITAS.
    The project officially started in January this year, when five European experts from Austria, Denmark, France and Germany arrived in Kyiv and joined the UNIA’s team.
    The project’s budget stands at 2.7mn Euros. Its implementation is planned for 28 months.
    Contact person for more information:
    Sergiy Grytsenko,
    Communications Specialist
    EU “Establishment of Mortgage Market Rules and Legislation” Project
    22, Gaidara Str., Block A
    01033 Kyiv, Ukraine
    Tel./Fax: +38 (044) 230 22 25, 230 22 26
    E-mail: office@mortgage.in.ua