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Dollar mortgage crisis in Ukraine

Dollar mortgage crisis in Ukraine
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There is conflict in the Ukraine property market. Many owners signed up for dollar mortgages which were popular before 2008. But a falling exchange rate with the hryvnia – the national currency has hit owners.

Seven years ago Natalia Korovay’s apartment was priced at 95,000 dollars. She still owes 65,000 and with property prices almost halved she can’t even sell to clear the debt.

“I used to pay 760 dollars each month. Since last summer even with our family income which includes my husband’s salary we cannot meet the monthly repayments,” she explained.

Thirteen banks have signed a proposal by the Ukraine central bank that the loans could be restructured at the official rate of exchange as of January 1 last year with the lender then writing off the difference.

“Owners who bought an apartment or house within a certain size and if it is the property where they actually live will get 50 percent of the loan written off after the debt restructuring. The others will have 25 percent written off,” said Roman Shpek Chairman of the independent association of Ukraine banks.

In 2008 the rate of exchange dropped from five to 10 hryvnias to the dollar and finally settled at around eight.

Since January last year it tumbled further from eight to the current rate of 26 to the dollar.