Mortgage lending market: problems and development prospects

The paper reveals the essence of the modern mortgage lending market carried out by banking institutions in Ukraine. The peculiarities of the market functioning and the factors that restrain its development in modern conditions are considered. The definition of the concept of “mortgage” is theoretically substantiated, and the general financial and economic characteristics of mortgage lending in Ukraine are provided. The paper considers main indicators of banking activities in mortgage lending in Ukraine for 2018-2021. The article reveals the analysis of consumer lending dynamics and proves that mortgages has been playing a key role in banking activities due to providing a significant part of income, proper consideration of the benefits and risks of working in this direction, as well as increase the stability of banks. To manage credit risk, the National Bank of Ukraine (NBU) has introduced risk factors for unsecured consumer loans. New credit approval standards for financial institutions were studied and it was established that the repayment term is one of the factors affecting the number of mortgage loans. It has been proven that the mortgage lending volume is greatly influenced by exchange rates.

Analysis of the situation in the primary market reveal that certain relations regarding the provision and repayment of the mortgage are formed between the mortgage lender and the borrower. The secondary market functions to refinance mortgage lenders and to attract loans through issuing mortgage securities, selling mortgage assets to banks, secondary professional non-bank mortgage financial institutions or use these mortgage assets as collateral. Secondary mortgage institutions must ensure the activity of mortgage lenders on the primary mortgage market with risks diversification and carrying out measures to refinance mortgage lenders at the expense of funds from the placement of mortgage securities. The secondary mortgage market was created due to the banking system seeking to finance long-term mortgages at the expense of short-term bank liabilities. That is why the creation of the secondary mortgage market is one of the main priorities of the state policy in the national mortgage system development. The interest rate on mortgage loans is one of the important factors affecting loans. Therefore, this factor needs a more profound analyzing.