If you thought that the headline was a joke or tongue in cheek, you were wrong. 10% interest annually is indeed cheap for home loans in Ukraine.
The level of 10% is considered low enough to brag about it as an achievement.
Home loans in Ukraine
In 1980s rates of 17% were a reality in developed countries like Australia and New Zealand, which was fairly recently by historical scale. Think about it, you probably are paying just as much for purchases on the credit card, unless you dutifully pay off the balance every month.
So, it’s not something extraordinary that Ukrainians have to put up with interest on home loans comparable to credit card rates in the West. The cost of real estate in Ukraine is also much lower, not because it’s cheaper to build, but because the dwellings are much smaller and standards of finishes are lower.
The cost per square meter of newly built apartments in Kyiv rarely drops under USD 600 per square meter, even in the most remote areas.
Homes in small towns and villages are, of course, cheaper than real estate in the capital and other popular large cities such as Odessa on the Black Sea. By the cost of real estate, prices in Odessa are comparable to Kyiv.
Regarding interest rates for home loans, 10% is something that the government was working hard to achieve, Volodymyr Zelensky, President of Ukraine, recently stated.
He said there are already some Ukrainians who could get such low rates to buy an apartment or a house. Achieving such level of interest helps more people to be able to afford to buy a property, Zelensky said.
Already in the first month of the program of affordable home loans, over 200 borrowers were able to use it. The total amount of credits issued by banks was 75 million hryvnia. Most banks started to offer such credits from 1 July 2020.
Below are the rates we found advertised online. As you can see, the offers are from 18% to 23,5% annually. So, if someone can get a loan offering only 10% annual repayments, this is indeed very cheap.
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