Mortgage Lending: All about the new rates

03.04.2011 10:43
Articles about real estate | Mortgage Lending: All about the new rates Loans for real estate, especially foreign exchange, very much spoiled the health of the banking system during the crisis.

That's why banks are not particularly slow to resume lending to housing. Yes, and "long" money needed to return to the segment of the mortgage bankers do not. However, some banks still offer loans. And advertise rates of 14-20% per annum, wrote Politics and Money.

Related article: People are unprepared to pay more for «extra» square meters

Complex market


Despite the fact that in the past year, banks began to pursue an active credit policy, to a segment of the mortgage relationship is still very cautious. And although the willingness to give credit to housing claims for more than 30 banks, in reality, credit conditions remain unfavorable, and requirements for borrowers - hard. In this case, if the property is on the secondary market to buy on credit is still possible that in the primary - almost unreal.

The main problem hindering the resumption of a normal mortgage - a "frozen" state of the real estate market: sales are very small, low-level buyers and sellers, of course, the price drop did not want. As a result, deals with housing point, and banks do not have strong incentive to renew loans, making conditions more loyal.

"Not all banks are interested in hosting the" not cheap "resources for a very long time, given the general economic situation in the country," - says Angela Aristarkhova, director of retail development Kreditprombank.

Builders also does not envy, because according to various estimates, more than half the buildings are still in a simple, and deadlines for virtually every object to be unmet. That's why banks are persistently unwilling to lend to those houses and apartments that are not in operation. And agree to lend except for those projects in which they are partners or owners of property developers.

"Banks do not want to lend to developers because many unfinished objects several times the credit is sold, and the banks do not know ultimately who they will fund," - says Svetlana Scribbles, Vice-Chairman of the Board of Erste Bank.

In addition, cheaper mortgages banks can not even for the reason that they simply have no money. Yes, the inflow of deposits in 2010 was huge - only from individuals, "it's" almost 50 billion USD. But all of this - the "short" resources that can not fully ensure the issuance of long-term loans - at 5, 10 and certainly over 20 years. That is why the mortgage banks reduce rates slowly and very reluctantly.

However, if you wish, even now you can find offers from banks sane conditions. And within a year, as promised bankers, mortgage rates will still fall as a full-fledged resumption of lending is unavoidable.

Ask for expensive


What's interesting is, the spread rates for mortgages remains strong. For example, you can come across as credit offers by 14-17% per annum and the rate at 25-27% per year. The average real rate (ie, taking into account all additional duties and "bribes") is in the range 20-22%, which will agree, is very expensive. For example, if you take a loan, such interest, then within 5 years the borrower to "give" to the bank for almost 50% of the cost of housing, for 10 years of overpayment will be 2 apartments, and in 20 years - more than 200%.

Bankers explain the heterogeneity of rates so that the cost per credit bank provides not only the future payments on deposits, but also the state's loan portfolio. Simply put, the banks that set higher rates are likely to have a sufficiently large share of "problemki" and enter the credit market very carefully.

In addition, some banks have moved to floating rates, which depend on the profitability of deposits and are reviewed annually. In this connection, consultations and research for business. For the lender is a kind of protection against volatility in the market, but for the borrower is a risk that each year the rate will increase, and, without his consent.

Also on charges for credit affects what is bank loans. For example, the lowest rates (around 15-16%), usually available for real estate with a "secondary" market, as well as on construction sites, which banks are offering in conjunction with the developer partners. The highest rates are in if the borrower chooses accommodation for the "primary" market, as well as the most "long" credits - up to 10-20 years.

"Now there are several banks offering credit facilities are not localized in the primary market, but this choice will result in increased interest for the borrower, because there are additional risks and costs for banks," - says Yuri Rudenko, a senior expert of the market analysts Ukrsibbank.

Gradually decreases and the size of the down payment. If six months ago, banks are required to make at least 40-50% of the cost of housing, but now the average size of the advance is around 30%, and there are already offers from banks that agree to lend up to 80-90% of the sales price.

Additional costs the borrower as well as earlier consist of home insurance (about 0,2-0,3% per year), the borrower's life (0,4-0,6% per year), as well as from the registration fee of 0,1% and deductions Pension Fund - 1%. Have to shell out 1-2 thousand UAH for a notary and pay a one-time commission to the bank - 1-5%.

The vagaries of banks


In general, credit is available not far at all properties. So, many banks are willing to lend only a dwelling, which is located in the capital and regional centers. Their logic is clear: if the borrower can not repay the loan in a major city to sell the apartment is much easier than anywhere in "the middle of nowhere."

But the most meticulous banks in relation to "the primary." As already mentioned, the borrower often has to settle for the projects offered by the bank in conjunction with the builder-partner. Of course, this restriction on square meters, and the prices.

However, if the borrower wants to choose to buy housing on the primary market alone, the rights he has even less. First, the housing should be completed for at least 80-90%, otherwise the bank will refuse to even consider a credit application. Secondly, it is possible that you have to stock up on alternative collateral to cover the losses in the bank if the house and will not be completed.

"The long by today's standards, terms of lending (over 15 years) the number of proposals on banks 'primary' market down at times, and a feature of such loans will transfer alternative collateral in a mortgage loan - already finished another real estate credit customer" - comments Chairman Energobank Helen Malin.

In addition, the "unfinished" - is still tighter credit conditions: a high rate, which can reach 25-28%, a large down payment, at the level of 40-60%, and sometimes - a shortened term loan, up to a maximum of 5-10 years .

Rigorous selection rules

Requirements that banks put up to borrowers - is a separate issue. "In carrying out the analysis of the potential borrower solvency requirements put forward to him the same regardless of whether they are buying real estate lending in the primary or secondary markets," - emphasizes Angela Aristarkhova.

Of course, none of the creditors does not take into account unofficial income, and all cash flows must be documented. Also, you must have a permanent place of work. Therefore, if the labor book "replete with" records, it can play against the borrower.

Minimum wage confirmed, with which the bank undertakes to consider an application for credit is 4-6 ths. And, of course, the higher - the better. For example, if you earn 10 thousand USD per month, you can expect to buy an apartment worth about 400-450 thousand UAH, provided that the term of the loan will be up to 10 years, and down payment - from 30%. With the salary of 20 thousand UAH loan amount for the remaining constant conditions to grow even before the 600-800 thousand UAH.

"It is also important to assess the borrower's assets if there are more than acquired property - cars, country homes, land, etc., because it speaks of a stable financial condition of the customer," - says Valery Patsuy, Head of Strategic Development and Marketing Retail FUIB.

When income is not enough, the bank can go three ways. The first - simply refuse, especially if the level of earnings is critical not reach the required (generally, salaries exceed the payment on the loan by 3-4 times). Second - require a solvent surety of close relatives or to provide additional, high-quality collateral. In a third embodiment of the bank may tighten credit conditions: to raise the initial fee, rate or shorten.

What next?


Whatever it was, the bankers promised that by the end of this year interest rates on all loans and mortgages in particular, will become more loyal. In particular, lending to real estate can become cheaper by 3-4 percentage points That is, borrowers have to pay banks to 12-14% per year, which pleases. Nevertheless, all the more common floating rates, especially on loans for more than 10 years. Banks, having learned from bitter experience, is not going to part with money easily as before.

"Today there is a trend to reduce the cost of resources for banks - is gradually lowered interest rates on deposits, and, respectively, and loans. Given the availability of excess liquidity in the banking system and on the background of enhanced selectivity of banks in the selection of borrowers, we can predict a gradual smooth reduction in interest rates ", - stressed the head of products for wealthy clients Ukrsotsbank Bogdan Gaponyuk.

Most likely, the amount of down payment will also be gradually reduced to 10-20%. Nevertheless, the market will remain a considerable number of banks, which will require an advance payment not less than 20-30%. The reason is the same: the high share of "problem" loans in their portfolios and the lack of sufficient reliable borrowers.

But the return of foreign currency loans, despite the fact that a moratorium on them even ended Jan. 1, should not wait. In this disinterested in the banks themselves, which have huge problems with those borrowers who took loans in dollars and euros before the crisis. Therefore, to lend in foreign currency will be banks that have such currency in excess, while those on the market - units.

Since the primary is the real estate situation is extremely difficult to predict because it depends on what happens with construction projects. It is the revival of developers and will become a factor that can unlock the full credit "of the primary, without reference to specific developers and will make these loans accessible to citizens.

By the way, a role in the reconstruction of mortgage lending can play and the state. This budget support assistance fund youth building, and financing of the State Mortgage Institution. However, it requires real action, not promises of officials. And whether taken any steps - a very controversial issue.

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Content tags: Mortgages Kiev
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