Demand Shifts Toward New Buildings: NBU Reveals Latest Mortgage Lending Data

In February, Ukrainian financial institutions issued 701 housing loans totaling UAH 1.4 billion. A recent survey of banks by the National Bank of Ukraine highlights a clear market trend: the primary real estate market is now the main driver of demand, with the highest concentration of activity traditionally found in the capital region.

Primary Market Outpaces Secondary Segment

The majority of mortgage capital is currently being directed toward purchasing property from developers. The lending distribution is as follows:

• New Construction: 386 loans worth UAH 767 million were granted for the primary market. Notably, 152 of these agreements (UAH 280 million) were secured by property rights for housing still in the construction phase.

• Secondary Market: This segment showed slightly lower performance, with banks financing 315 transactions totaling UAH 628 million.

Interest Rates and Banking Sector Stability

Mortgage conditions vary significantly based on the property type. Financing for new buildings remains more cost-effective: the weighted average effective rate for the primary market is 8.25% per annum, whereas for existing homes, it stands at 9.46%.

The regulator also points to the relatively stable quality of the mortgage portfolio, with the share of non-performing loans remaining at approximately 13%. While 38 banks (representing over 95% of the country's mortgage portfolio) participated in the study, only 16 institutions were actively issuing new loans in February.

Regional Leaders and the Modern Borrower Profile

The Kyiv region maintains its position as the undisputed market leader:

• Kyiv Oblast: Accounts for 34% of the total volume with 225 contracts worth UAH 473 million.

• Kyiv City: Ranks second with 145 loans totaling UAH 319 million.

• Other Key Regions: Significant activity was also observed in the Lviv, Volyn, and Vinnytsia regions.

Analysts suggest that state-subsidized lending programs continue to be the primary engine of the market. The average borrower is around 35 years old, with military personnel and security sector employees making up the majority of clients. Additionally, the state is actively incentivizing the primary market: the proportion of deals for homes under construction within state programs is steadily rising, as confirmed by the increasing number of loans secured by property rights.